AUD/NZD crosses 1.07 on surprisingly hawkish RBA statement

• Aussie hops on RBA statement, but middling China PMI second-guesses the move.
• Japan's long holiday is sapping liquidity in Friday's early trading.

The Aussie caught some lift in early Asia trading, peaking at 1.0720 against the Kiwi following the Reserve Bank of Australia's (RBA) latest monetary policy statement.

RBA’s SoMP: If economy improves as expected, higher rates are appropriate

In the RBA's quarterly Monetary Policy Statement, the central bank highlighted that increasing interest rates will be appropriate 'at some point', all hinging on the caveat that inflation reaches the RBA's inflation target, which they also lifted to 2% from the previous 1.75%. The RBA also expects Australia's GDP growth to hit 3.25% by December 2018, but cautioned that an increasing AUD would undermine their easing efforts and push out rate hikes.

The Aussie is also seeing some pushback following the Chinese Services PMI, which came in at 52.9, a better showing than the previous reading of 52.3 but still missing the forecast 53.9. The softer-than-expected reading puts pressure on currencies like the AUD that share heavy trade with China.

China's Caixin services PMI rises to 52.9 in April, misses estimates

Today also sees Inflation Expectations from the Reserve Bank of New Zealand (RBNZ), which last printed at 2.1%, but overall market liquidity in the Asia session is limited and reactions will have a limited effect with Japanese markets taking the day off for Greenery Day.

AUD/NZD Levels to watch

The AUD/NZD has consolidated for almost two weeks, and the pair has rough boundaries established at 1.0730 and 1.0675, and a break to the topside will see further pressure from March's high at 1.0800, while a bearish continuation will see resistance from April's low at 1.0490.