According to Sean Callow, Research Analyst at Westpac, RBNZ governor Adrian Orr’s first policy statement on 10 May provided the spark for AUD/NZD to break its ranges to the top side.
Key Quotes
“By declaring that the “direction of our next move is equally balanced, up or down”, the RBNZ provided a clear contrast to the RBA messaging. This should persist at least for the next few months, helping AUD/NZD maintain notably higher ranges.”
“The RBA’s message has not changed; indeed in its own quarterly statement in May, the RBA stuck to its bullish 3.25%yr Australian GDP forecast for both 2018 and 2019, a view reiterated at the June RBA Board meeting. It has also made clearer its view that its baseline view is that “higher interest rates are”¦likely to be appropriate at some point.”
“This looked to be the main driver of AUD/NZD’s rally in mid-May. But there might have also been modest support from relative commodity prices and a pause in US-China trade negotiations.”
“Persistence of the apparent RBA-RBNZ divergence would be supportive of AUD/NZD.”
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