AUD/NZD market mood: RBA bearish policy tweak brings AUD weakness

Giles Coghlan LLB, Lth, MA Financial Source

Listen to the latest market mood for the AUDNZD pair.

Weak AUD, Strong NZD

The latest employment data from New Zealand last night was a strong beat. The unemployment rate fell to 4.9% from an expected 5.6% and the employment change rose to 0.7% from an expected -0.1%. This led ANZ investment bank to raise their RBNZ forecast to ‘on hold'.

The Reserve Bank of Australia kept the cash rate and the 3yr bond yield target unchanged at 0.10% as expected. The RBA also said that they will not increase rate until actual inflation is above the 2-3% target range. This means that interest rates may not be increased until 2024. The change to the policy was the extension of bond purchases by $AUD100 billion. This was slightly unexpected and brought AUD weakness as the RBA gave a bearish tweak to their policy.

This means that AUDNZD rallies higher should find sellers.

Trade Risks:

The main risk to this trade is from any data that weakens the outlook for New Zealand.
Any positive sentiment from Governor Lowe could also support the AUD.

Learn more about HYCM

Author

Giles Coghlan LLB, Lth, MA

Financial Source

Giles is the chief market analyst for Financial Source. His goal is to help you find simple, high-conviction fundamental trade opportunities. He has regular media presentations being featured in National and International Press.

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