AUDNZD rebounds above 1.0900 as hawkish RBA bets soar

• AUDNZD has picked significant bids from 1.0884 amid rising hawkish bets for the RBA.
• More frequent RBA board meetings provide an opportunity for rate synchronization with global leaders.
• Going forward, Business NZ PMI data will be keenly watched.

The AUDNZD pair has witnessed fresh demand after dropping below 1.0884 in the early Asian session. The asset has reclaimed the round-level hurdle of 1.0900 as bets for the continuation of the rate hike by the Reserve Bank of Australia (RBA) have soared. The cross is mostly trading sideways amid the absence of a critical trigger that could lead to a decisive movement ahead.

Meanwhile, economists at Goldman Sachs have come forward with a hawkish view on interest rates by the RBA ahead. "Against the backdrop of such a large and protracted inflation overshoot, we were surprised by the RBA's October decision to slow the pace of rate hikes - particularly before the policy rate had reached the lower bound of their 3.00-4.50% nominal 'neutral rate' estimate."

On forward guidance, the investment banking firm believes that RBA’s more frequent board meetings provide a potential opportunity for RBA Governor Philip Lowe to synchronize with the global policy tightening pace.

Last week, the RBA monetary policy statement disclosed their bleak projections on Gross Domestic Product (GDP) outlook. Also, short-term inflation expectations remained higher at around 8%, as inflationary pressures in the Australian region have not displayed signs of exhaustion yet.

On the Kiwi front, investors are awaiting the release of the Business NZ PMI data, due on Thursday. The economic data is seen higher at 52.7 vs. the prior release of 52.0. But before that, inflation expectations for two years from now will be keenly watched. Globally, price pressures will likely remain elevated in CY2023 led by rising prices for services and raw materials. An increment in long-term inflation expectations could bring volatility to the counter.