- AUD/NZD remains stronger following the RBA’s decision to keep the Official Cash Rate at 4.35% at Tuesday’s meeting.
- The upside Australian Dollar could be retrained as the second-quarter inflation data has reduced odds for another RBA rate hike.
- The New Zealand Dollar struggles as the RBNZ is highly expected to deliver an early interest rate cut in October.
AUD/NZD extends its winning streak for the third successive session, trading around 1.0980 during the Asian hours on Tuesday. The AUD/NZD cross appreciates following the Reserve Bank of Australia’s (RBA) monetary policy decision to keep the Official Cash Rate (OCR) at 4.35% for the sixth time. Traders will likely pay close attention to RBA Governor Michele Bullock’s upcoming speech, which could offer insights into the board’s future policy direction.
The Australian Dollar (AUD) could struggle against its peers as the second-quarter inflation data has diminished expectations for another RBA rate hike. Markets estimate an RBA rate cut in November, a move anticipated much earlier than previously forecasted for April next year.
On the Kiwi front, expectations of an early interest rate cut by the Reserve Bank of New Zealand (RBNZ) put pressure on the Kiwi Dollar and support the AUD/NZD cross. This sentiment follows data showing that the domestic annual CPI rate dropped to its lowest level in three years for the June quarter. The RBNZ’s next policy meeting is set for August 14, with markets partly anticipating a rate cut then and fully expecting one by October.
Traders will likely watch the release of China’s July Consumer Price Index (CPI) on Friday for new momentum. The CPI is expected to show a 0.4% year-on-year increase. A weaker-than-expected reading of an economic slowdown in China could affect both antipodean currencies, as China is a significant trading partner for Australia and New Zealand.
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