Last week both the RBA and the RBNZ met, but their policy responses were quite different and a divergence has opened up between them. The RBA hiked by 25bps, but there had been a 50% chance that it would hike by 50bps according to short-term interest rate markets. The RBNZ, by contrast, hiked by 50bps and had mooted the idea of a larger 75bps rate hike.
The forward guidance was different too. The RBA has taken a more cautious note recently on further rate hikes and expressed some concerns about its domestic economy and the slowing global economy. Short Term Interest Rates are priced in a lower terminal rate after the last meeting.
The RBNZ, by contrast, had a far more hawkish perspective and Governor Orr stated in the annual report on Oct 11 that ‘there is more work to do and increasing the official cash rates the most effective way we can reduce inflation and support maximum sustainable employment’. This hawkish comment was reflected in the terminal rate which is currently set to be just under 5% for May 2023 next year.
This divergence should favour AUDNZD selling in the near term with a divergence in the central banks’ move relative to the market’s pricing for their rate decisions.
Major trade risks: The major risk here is if the RBA or the RBNZ make any significant announcements that change this outlook.
Our products and commentary provides general advice that do not take into account your personal objectives, financial situation or needs. The content of this website must not be construed as personal advice.
Recommended Content
Editors’ Picks

Gold gives away some gains, slips back to $2,980
Gold retraced from its earlier all-time highs above the key $3,000 mark on Friday, finding a footing around $2,980 per troy ounce. Profit-taking, rising US yields, and a shift to a risk-on environment seem to be putting the brakes on further gains for the metal.

EUR/USD remains firm and near the 1.0900 barrier
EUR/USD is finding its footing and trading comfortably in positive territory as the week wraps up, shaking off two consecutive daily pullbacks and setting its sights back on the pivotal 1.0900 mark—and beyond.

GBP/USD remains depressed, treads water in the low-1.2900s
GBP/USD is holding steady in consolidation territory after Friday’s opening bell on Wall Street, hovering in the low-1.2900 range. This resilience comes despite disappointing UK data and persistent selling pressure on the USD.

Crypto Today: BNB, OKB, BGB tokens rally as BTC, Shiba Inu and Chainlink lead market rebound
Cryptocurrencies sector rose by 0.13% in early European trading on Friday, adding $352 million in aggregate valuation. With BNB, OKB and BGB attracting demand amid intense market volatility, the exchange-based native tokens sector added $1.9 billion.

Week ahead – Central banks in focus amid trade war turmoil
Fed decides on policy amid recession fears. Yen traders lock gaze on BoJ for hike signals. SNB seen cutting interest rates by another 25bps. BoE to stand pat after February’s dovish cut.

The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.