Listen to the latest market mood for the AUDNZD pair.
Strong AUD, Weak NZD
AUDNZD is a currency in the spotlight at the moment as both Australia and New Zealand have managed to effectively control the outbreak of COVID-19. A key focus for the pair going forward will be the policy divergence between the RBA and the RBNZ.
The general consensus is that this week’s RBNZ meeting will be dovish. The economy is in recession after GDP shrunk 1.6% in Q1 and is expected to shrink again in Q2. The ANZ Bank said in a note that RBNZ would likely acknowledge activity recovering but would point out that the country had not avoided a recession. According to ANZ’s Sharon Zollner, it would, therefore, strike a balance between “an encouraging tone while still sounding suitably dovish” in order to keep the New Zealand dollar and monetary conditions low.
Therefore, expect AUDNZD buyers from pullbacks.
We expect this outlook to play out over this week after the RBNZ rate meeting.
Main Trade Risks
- One risk is if the RBNZ is more optimistic than the market is currently expecting.
- Another risk is any breakdown in the US-China trade deal as that will hit the AUD harder than the NZD.