- AUD/NZD outlook into the RBNZ event is bullish on a 25BP hike.
- Traders are fully pricing in a 25bp hike, although 50bp is the biggest risk.
The RBNZ meets today and analysts are overwhelmingly expecting a 25bp hike rather than 50bp. This is where the risk is for the cross. A 50bp increase will see the kiwi fly considering the market has clipped it wings on the basis that a hike has been well telegraphed for a long time
This brings us to the charts:
AUD/NZD daily chart
For the near term, this is the potential outlook for today's main event. Given the market will not be surprised that the RBNZ hikes, a move higher would not be unrealistic, especially as traders factor in the path of central banks in general. The RBNZ’s OCR track will be key in determining how far the kiwi could fall.
If there is a tendency towards an endpoint near 3% but dovish rhetoric, in so much that 25 bp OCR rate hikes will possibly be all we will get from the RBNZ between now and then, this leaves plenty of room for the RBA to catch up. Thus, there could be more value in the Aussie moving forward should a 2023 rate hike remain a possibility if inflation, wages and growth surprise to the upside.
In the event that there is a 50bp hike, there will be the toss-up between how detrimental this might be for the economy vs what this will mean to a market that is already long of NZD. The knee jerk will undoubtedly see a bid in the kiwi, especially as markets are nervous going into the meeting and waiting on the sidelines, waiting to pile in on such an outcome.
AUD/NZD H1 chart
The price would be expected to extend distribution that has started to take place ahead of the meeting. A break of the dynamic support would open the risk of a knee-jerk run on 1.0380 and then 1.0320 stops.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD favours extra retracements in the short term
AUD/USD kept the negative stance well in place and briefly broke below the key 0.6400 support to clinch a new low for the year on the back of the strong dollar and mixed results from the Chinese docket.
EUR/USD now shifts its attention to 1.0500
The ongoing upward momentum of the Greenback prompted EUR/USD to lose more ground, hitting new lows for 2024 around 1.0600, driven by the significant divergence in monetary policy between the Fed and the ECB.
Gold ascends but remains shy of testing $2,400 amid hawkish Fed remarks
Gold prices edged higher late in North American session, gaining 0.22% following a hawkish tilt by Fed Chair Jerome Powell. Economic data from the United States was mixed, though Monday’s Retail Sales report and Powell’s remarks kept US Treasury yields higher, capping the yellow metal’s advance.
Bitcoin price outlook amid increased demand and speculation pre-halving
Bitcoin price is edging lower as markets count only days to the halving. Nevertheless, the dump has not shaken the faith of large holders as they continue to cling to their holding even after a month of steady dumps.
UK CPI inflation data ahead: Sterling hovering north of key support
Following today's mixed bag of employment and wages data, today’s attention is directed to the March UK CPI inflation release. Both headline and core measures have surprised to the downside in the previous two releases and are expected to demonstrate further evidence of disinflation.