**AUD/USD, NZD/USD, and AUD/NZD Outlook Ahead of RBNZ Decision**
*Adapted and expanded from an original article by Zain Vawda on Forex Factory.*
The currency markets have seen increased volatility in recent weeks as investors weigh the latest economic data, surprises in inflation readings, and shifting expectations around central bank policies. The focus for the Australian and New Zealand dollars has sharpened significantly as we approach the next Reserve Bank of New Zealand (RBNZ) policy decision. Both the Australian dollar (AUD) and New Zealand dollar (NZD) have been highly sensitive to developments in their domestic economies, as well as broader global trends like changing risk appetite and moves in the US dollar (USD).
This article provides an in-depth outlook for the AUD/USD, NZD/USD, and AUD/NZD pairs ahead of the RBNZ meeting, examining the technical setups, fundamental themes, and key risk events traders should monitor in the coming days.
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**Fundamental Backdrop: Shifting Central Bank Expectations**
*Reserve Bank of Australia (RBA)*
– The RBA has recently faced revived inflationary concerns after a strong reading in Australia’s Q1 2024 CPI data. This has led some economists to delay projections for the first rate cut from the RBA.
– The RBA has kept its interest rate at 4.35 percent since November 2023, adopting a cautious approach amid still-sticky inflation.
– Recent Australian data show strength in the labor market and consumer spending, suggesting the RBA may not be in a rush to ease policy, which tends to support the AUD.
*Reserve Bank of New Zealand (RBNZ)*
– The RBNZ’s next interest rate decision is highly anticipated, as markets look for guidance on whether New Zealand’s central bank is ready to shift to an easing bias or continue to signal a prolonged hold.
– The New Zealand economy has shown sluggish growth and signs of strain, especially in the housing market. However, the most recent inflation print showed a modest decline but remained well above the RBNZ’s 1-3 percent target range.
– Markets have trimmed expectations for aggressive rate cuts from the RBNZ, with the first move now fully priced in for November or February next year.
*US Dollar Influence*
– The broader strength in the USD has influenced both AUD/USD and NZD/USD. Data from the US, particularly nonfarm payrolls and inflation releases, have driven large moves, with markets oscillating between hopes for earlier Fed cuts and a “higher-for-longer” scenario.
– Hawkish comments by some Federal Reserve officials and resilient US growth have contributed to a firmer dollar, generally weighing on the Antipodean currencies.
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**Key Risks and Data Points Ahead**
– The RBNZ policy meeting is the headline event, with any shift in forward guidance or economic projections likely to trigger volatility in NZD pairs.
– For Australia, traders are monitoring jobs
Read more on AUD/USD trading.