AUD/NZD retakes 1.1400 for the first time since 2022 on RBA’s hawkish on-hold decision

AUD/NZD gains some follow-through positive traction after the RBA announced its policy decision.
The RBA’s expectations that inflation in the September quarter may be higher boost the AUD.
Bets for more RBNZ rate cuts contribute to the NZD’s underperformance and support the cross.

Haresh Menghani FXStreet

The AUD/NZD cross climbs to a fresh high since October 2022 during the Asian session on Tuesday, with bulls looking to build on the momentum beyond the 1.1400 mark following the Reserve Bank of Australia (RBA) decision.

As was widely expected, the RBA left the Official Cash Rate (OCR) unchanged at 3.6% at the end of the September monetary policy meeting. In the accompanying policy statement, the central bank noted that the decline in underlying inflation has slowed and that inflation in the September quarter may be higher than expected at the time of the August SOMP. This, in turn, reduces the odds of additional interest rate cuts and provides a modest lift to the Australian Dollar (AUD).

Meanwhile, the RBA's hawkish outlook marks a significant divergence in comparison to firming expectations for more interest rate cuts by the Reserve Bank of New Zealand (RBNZ). This is seen as another factor that offers additional support to the AUD/NZD cross and backs the case for an extension of the recent well-established uptrend witnessed over the past month or so. That said, extremely overbought conditions on the daily chart warrant caution for bulls.

The market focus now shifts to the RBA’s post-meeting press conference, where comments from Governor Michele Bullock will be looked upon for cues about the future policy outlook. This, in turn, will play a key role in influencing the AUD and providing a fresh impetus to the AUD/NZD cross. Nevertheless, the aforementioned fundamental backdrop validates the positive outlook and suggests that the path of least resistance for spot prices remains to the upside.

Economic Indicator

RBA Press Conference

Following the Reserve Bank of Australia’s (RBA) economic policy decision, the Governor delivers a press conference explaining the monetary policy decision. The usual format is a roughly one-hour presser starting with prepared remarks and then opening to questions from the press. Hawkish comments tend to boost the Australian Dollar (AUD), while on the opposite, a dovish message tends to weaken it.

EUR/USD trims gains, back below 1.1800

EUR/USD now loses some upside momentum, returning to the area below the 1.1800 support as the Greenback manages to regain some composure following the SCOTUS-led pullback earlier in the session.

GBP/USD off highs, recedes to the sub-1.3500 area

Following earlier highs north of 1.3500 the figure, GBP/USD now faces some renewed downside pressure, revisiting the 1.3490 zone as the US Dollar manages to regain some upside impulse in the latter part of the NA session on Friday.

Gold climbs to weekly tops, approaches $5,100/oz

Gold keeps the bid tone well in place at the end of the week, now hitting fresh weekly highs and retargeting the key $5,100 mark per troy ounce. The move higher in the yellow metal comes in response to ongoing geopolitical tensions in the Middle East and modest losses in the US Dollar.