- AUD/NZD saw a dramatic turnaround from a one-week low hit on Wednesday.
- The RBNZ announced a 50 basis point rate cut, weighing heavily on the NZD and driving the cross.
- Disappointment over China’s stimulus update undermines AUD and could limit further gains.
The AUD/NZD cross rebounds from a one-week low hit during the Asian session on Wednesday with buying interest gaining pace after the Reserve Bank of New Zealand (RBNZ) announced its policy decision. Spot prices shot up towards the 1.1050 area in the past hour, closer to the highest level since August 16 touched earlier this week and look set to appreciate further.
As anticipated, the RBNZ reduced the Official Cash Rate (OCR) by 50 basis points (bps) to 4.75% at the conclusion of the October meeting. In the accompanying policy statement, the central bank noted that excess capacity has reduced inflation expectations, and changes in prices and wages are now more consistent with a low inflation environment. This raises the possibility of further rate cuts in the coming months, which in turn weighs heavily on the New Zealand Dollar (NZD) and provides a nice boost to the AUD/NZD cross.
The Australian Dollar (AUD), on the other hand, struggles to attract buyers and languishes near a multi-month low against the US Dollar (USD) amid disappointment over China’s stimulus update on Tuesday. This could stop traders from placing aggressive bullish bets around the AUD/NZD cross and limit further gains. That said, some follow-up buying beyond the 1.1060 area could trigger a fresh bounce from a short covering move and set the stage for an extension of the up move seen over the past two weeks or so.
economic indicator
Interest rate decision
RBNZ Interest Rate Decision Announced by the Reserve Bank of New Zealand.This rate affects a range of interest rates set by commercial banks, building societies and other institutions towards their own savers and borrowers. It also tends to affect the price of financial assets, such as bonds, stocks and exchange rates, which affect consumer and business demand in a variety of ways.
Last post:
Wed Oct 09, 2024 01:00
Frequency:
Irregular
Current:
4.75%
Dear:
4.75%
Previous:
5.25%
Fountain:
Reserve Bank of New Zealand
The Reserve Bank of New Zealand (RBNZ) holds monetary policy meetings seven times a year, announcing its decision on interest rates and the economic assessments that influenced its decision. The central bank offers clues about the economic outlook and future policy path, which are highly relevant to the valuation of the NZD. Positive economic developments and optimistic outlook could lead the RBNZ to tighten policy by raising interest rates, which tend to be bullish for the NZD. Policy announcements are usually followed by Governor Adrian Orr’s press conference.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
