AUD/NZD: RBA Rate Cut Speculation Builds as RBNZ feeds

The central bank in New Zealand surprised by changing its stance to neutral in a move that was more aggressive than anticipated. This sent the kiwi lower and also has implications for the Australian dollar.

The team at RBS projects the next moves for AUD/USD and AUD/NZD:

Here is their view, courtesy of eFXnews:

The RBNZ has given the market bears a reason to price in rate cuts, by placing a bit more emphasis on the negatives, paying lip-service to the positives, and widening the confidence band around a now neutral policy outlook, notes RBS.

“However, the deeper substance reveals only a slight downward revision to a still above trend growth outlook,” RBS adds.

“The further significant fall in commodity prices this year and the desire to lock in recent currency falls may be the motivation for the RBA cut rates as soon as next week. We expect the RBA to at least move to a clear easing bias,” RBS argues.

“As such we see further near term downside for the AUD/USD, and continue to expect another stab at record lows in AUD/NZD,” RBS projects.

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