AUD/NZD rallies to 1.1130 area, closer to multi-month top after RBA’s 25 bps rate cut

AUD/NZD rebounds swiftly from over a one-week low touched earlier this Tuesday.
The move up picks up pace after the RBA’s widely expected 25 bps interest rate cut.
Traders now look forward to the post-meeting press conference for a fresh impetus.

Haresh Menghani FXStreet

The AUD/NZD cross stages a goodish rebound from over a one-week low, around the 1.1075 region touched during the Asian session on Tuesday, and gains follow-through traction after the Reserve Bank of Australia (RBA) announced its policy decision. Spot prices currently trade around the 1.1130 area, up nearly 0.50% for the day, and remain close to a multi-month peak touched last week.

The RBA board members decided to lower the Official Cash Rate (OCR) by 25 basis points (bps) from 4.35% to 4.1% at the end of the February policy meeting. This was the first RBA rate cut since November 2020 and was fully priced in the market. In the absence of fresh dovish signals, the Australian Dollar (AUD) strengthens across the board and turns out to be a key factor that provides a goodish lift to the AUD/NZD cross.

The New Zealand Dollar (NZD), on the other hand, continues with its relative underperformance amid rising bets that the Reserve Bank of New Zealand (RBNZ) will deliver a third supersized rate cut later this month. This further contributes to the strong bid tone surrounding the AUD/NZD cross. Traders now look to the RBA's post-meeting presser, where comments from RBA Governor Michele Bullock might influence the AUD.

Economic Indicator

RBA Interest Rate Decision

The Reserve Bank of Australia (RBA) announces its interest rate decision at the end of its eight scheduled meetings per year. If the RBA is hawkish about the inflationary outlook of the economy and raises interest rates it is usually bullish for the Australian Dollar (AUD). Likewise, if the RBA has a dovish view on the Australian economy and keeps interest rates unchanged, or cuts them, it is seen as bearish for AUD.

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