- AUD/NZD is taking a hit on RBA's change of tune on interest rates.
- RBA's Lowe, while speaking at an even earlier today, said there is a chance the next move in interest rates could be down.
The Aussie is fast losing altitude, now trading at five-week lows against the New Zealand dollar, courtesy of dovish comments by Reserve Bank of Australia's Lowe.
In his first public speech of the year, the central bank head adjusted the forward guidance to neutral by stating that the probabilities appear to be more evenly balanced" between an interest rate hike and an interest rate cut.
The markets, however, are reading Lowe's shift to a neutral stance as a dovish sign. After all, the central bank maintained until today that its next move will likely be a rate hike.
The change of attitude on interest rates comes on the back of a slowing economy and the crumbling housing market. Further, wage growth remains anemic despite the labor market tightening. What's more, the global economic conditions have deteriorated in the last two months.
Therefore, the markets may begin pricing a higher probability of a rate cut this year. Hence, the Aussie dollar is likely to remain on the defensive in the near-term.
As of writing, the AUD/NZD pair is trading at 1.0415 - the lowest level since Dec. 31 - having clocked a high of 1.0530 earlier today.
AUD/NZD pivot points
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