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

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.