The AUD/NZD continues its upward trend following the RBA’s decision to maintain the Official Cash Rate at 4.35% during Tuesday’s meeting. The Australian Dollar remains strong, but faces obstacles with the latest inflation data reducing the likelihood of another rate hike by the RBA. Meanwhile, the New Zealand Dollar struggles as the RBNZ is expected to implement an early interest rate cut in October.
Currently trading around 1.0980, the AUD/NZD pair has seen gains for the third consecutive session. The RBA’s decision to keep rates steady for the sixth time has bolstered the cross, with traders now awaiting insights from RBA Governor Michele Bullock’s upcoming speech on the future policy direction.
However, the Australian Dollar’s strength may be short-lived as market expectations of a rate cut in November loom. This anticipated move, much earlier than previously predicted for April 2023, could put pressure on the AUD against its counterparts.
On the other hand, the Kiwi Dollar faces challenges as the RBNZ gears up for a potential rate cut. Recent data revealing a drop in the domestic CPI rate to a three-year low has fueled expectations for an early policy adjustment. With the RBNZ’s next meeting scheduled for August 14, markets are bracing for a rate cut, with full certainty of one by October.
Traders will be closely monitoring China’s July Consumer Price Index (CPI) release on Friday for further market direction. Any signs of economic slowdown in China could impact both the Australian and New Zealand currencies, given their significant trade ties with the country.
In conclusion, the AUD/NZD pair’s movements are heavily influenced by central bank decisions and economic data releases. With the RBA maintaining rates and the RBNZ preparing for a potential cut, traders must stay vigilant for any policy shifts that could impact the antipodean currencies. Additionally, external factors such as China’s economic health play a crucial role in determining the strength of the Australian and New Zealand Dollars.