The October 5 Reserve Bank Of Australia (RBA) policy meeting will be followed a day later by that of the Reserve Bank of New Zealand (RBNZ). Although AUD/NZD trended lower from late March to mid-September, it has subsequently recovered some ground. The near-term outlook for the currency pair is likely to be governed by the outcome of this week’s central bank meetings. Looking ahead, economists at Rabobank forecast AUD/NZD at 1.03 on a three-month view.
Differing policies
“Any indication from the RBNZ that it could delay a second rate hike until 2022 could push AUD/NZD higher near-term. That said, we still expect the cross rate to turn lower medium-term based on the dovish position of the RBA.”
“Even on a rate hike this week from the RBNZ, there is scope for the NZD to move lower if guidance limits the potential for another rate hike this year. Last week’s high at AUD/NZD 1.0492 is likely to offer some resistance.”
“Medium-term, we expect the dovish position of the RBA to pave the way for a move towards 1.03 on a three-month view.”
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