AUD/NZD rallies beyond 1.1000, highest since early April after RBNZ’s dovish 25 bps rate cut

AUD/NZD regains positive traction and spikes to a fresh multi-month top.
The RBNZ lowered OCR by 25 bps and projected further interest rate cuts.
Traders now look to the post-meeting press conference for some impetus.

Haresh Menghani FXStreet

The AUD/NZD cross attracts some dip-buyers near the 1.0940 region, or a one-and-a-half-week low touched during the Asian session on Wednesday, and snaps a two-day losing streak. The intraday positive move picks up pace following the Reserve Bank of New Zealand's (RBNZ) interest rate decision, lifting spot prices beyond the 1.1000 psychological mark, to the highest level since early April in the last hour.

As was widely expected, the central bank lowered the Official Cash Rate (OCR) from 3.25% to 3.0%. In the accompanying policy statement, the RBNZ projected inflation returning to target by mid-2026 and highlighted spare capacity, stalled growth, and cautious behavior as downside risks. Furthermore, the central bank sees lower OCR levels through 2026, which, in turn, prompts aggressive selling around the New Zealand Dollar (NZD) and provides a goodish lift to the AUD/NZD cross.

The intraday move up, meanwhile, seems rather unaffected by the prevalent selling bias around the Australian Dollar (AUD), suggesting that the path of least resistance for spot prices is to the upside. Traders, however, might refrain from placing fresh bets and opt to wait for more cues about the future rate-cut path. Hence, the focus now shifts to the post-meeting presser, where comments from RBNZ Governor Christian Hawkesby would influence the NZD and the AUD/NZD cross.

Economic Indicator

RBNZ Interest Rate Decision

The Reserve Bank of New Zealand (RBNZ) announces its interest rate decision after each of its seven scheduled annual policy meetings. If the RBNZ is hawkish and sees inflationary pressures rising, it raises the Official Cash Rate (OCR) to bring inflation down. This is positive for the New Zealand Dollar (NZD) since higher interest rates attract more capital inflows. Likewise, if it reaches the view that inflation is too low it lowers the OCR, which tends to weaken NZD.

Why it matters to traders?

The Reserve Bank of New Zealand (RBNZ) holds monetary policy meetings seven times a year, announcing their decision on interest rates and the economic assessments that influenced their decision. The central bank offers clues on the economic outlook and future policy path, which are of high relevance for the NZD valuation. Positive economic developments and upbeat outlook could lead the RBNZ to tighten the policy by hiking interest rates, which tends to be NZD bullish. The policy announcements are usually followed by interim Governor Christian Hawkesby's press conference.

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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