AUD/NZD recovered back above the 107 handle despite NZ CPI beat

AUD/NZD made a two-week high at 1.0781 before retreating to 1.0725 ahead of the New Zealand Consumer Price Index for which sent the pair even lower to 1.0682. First of all, the Reserve Bank of Australia's October minutes left the door open to further easing without providing guidance on when the cash rate might be cut again.

As analysts at Westpac pointed out, "the minutes also mentioned arguments against cutting rates but obviously opted to act anyway. AUD/USD traded quietly, orbiting 0.6775 for no net change." Markets are pricing 10bp of easing at the 5 Nov RBA meeting, according to analysts at Westpac. 

New Zealand Q3 CPI rose above the market consensus

Then, getting stuck into the Kiwi's fundamentals, the first data event came with the GDT dairy auction which showed prices rising 0.5% overall. "Westpac revised up its forecast for Fonterra’s farmgate milk price for this season, from NZD6.50 to NZD6.80 per kilo of milk solids," the analysts explained.

As for New Zealand Q3 CPI, this rose above the market consensus of 0.6% and 1.4% to 0.7% and 1.5% on QoQ and YoY basis respectively. While the data was positive for the bird, overall, it does little to steer the RBNZ away from a dovish bias - Market pricing for RBNZ is for 25bp of easing on 13 November.

AUD/NZD levels