The Reserve Bank of Australia meets next week on Tuesday, June 6 at 05:30 UK time. The expectations from the short-term interest rate markets are that rates will be unchanged at 3.85%. However, interest rate markets still see a terminal rate of over 4% ahead of the RBA. If the RBA surprises interest rate markets and communicates that it has finished its rate hiking cycle then the AUD could potentially lose value against the NZD.

This makes the seasonal pattern of weakness for the AUDNZD very interesting. Over the last 15 years, the AUDNZD pair has lost value nearly 70% of the time between June 13 and July 10. The AUDNZD pair has seen an average fall of -0.45% with the largest fall -1.85% in 2014.

So, would a signal from the RBA that it has finished hiking rates send the AUDNZD lower next week?

Major Trade Risks: The major near-term trade risk here is if the RBA surprises markets again with another rate hike. The headline inflation is still 7% y/y, and core inflation is 6.6%, so the RBA will likely be reluctant to signal the end of further rate hikes.

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