- AUD/NZD rallies around 45 pips intraday following the release of the upbeat Chinese PMI print.
- The RBA’s on-hold rate decision and hawkish outlook do little to provide any meaningful impetus.
- Bets for more aggressive RBNZ interest rate cuts favor bulls ahead of NZ jobs data on Wednesday.
The AUD/NZD cross reverses an Asian session dip to the 1.0990 region and rallies to a one-week top on Tuesday in reaction to the upbeat Chinese data. Spot prices stick to modest intraday gains around the 1.1030 area and move little after the Reserve Bank of Australia (RBA) announced its policy decisions.
Data published earlier this Tuesday showed that business activity in China's services sector expanded at the fastest pace in three months during October and the Caixin/S&P Global Services PMI rose from 50.3 in September to 52. This was consistent with the official PMIs released last week and could be seen as an early sign that China's big stimulus push is helping improve business conditions, which, in turn, provides a goodish lift to the Australian Dollar (AUD).
The New Zealand Dollar (NZD), on the other hand, continues with its relative underperformance in the wake of rising bets for more aggressive interest rate cuts by the Reserve Bank of New Zealand (RBNZ). The expectations were reaffirmed by RBNZ's semi-annual Financial Stability Report, which indicated that the economic conditions remain challenging and also warned about the impact of geopolitical tensions on the economy.
The report further stated that rising unemployment is starting to create acute financial difficulties for some households. Adding to this, RBNZ Governor Adrian Orr said that the real economy is lagging reduction in interest rates. Meanwhile, the RBA's widely anticipated decision to leave the cash rate unchanged at 4.35% and hawkish outlook did little to impress the AUD bulls or provide any meaningful impetus to the AUD/NZD cross.
In the post-meeting press conference, RBA Governor Michele Bullock reiterated that there are still risks on the upside for inflation and that rates need to stay restrictive for the time being. This, in turn, suggests that the path of least resistance for the AUD/NZD cross remains to the upside. Investors now look forward to the release of the quarterly employment report on Wednesday, which could determine the near-term trajectory for the currency pair.
Economic Indicator
RBA Interest Rate Decision
The Reserve Bank of Australia (RBA) announces its interest rate decision at the end of its eight scheduled meetings per year. If the RBA is hawkish about the inflationary outlook of the economy and raises interest rates it is usually bullish for the Australian Dollar (AUD). Likewise, if the RBA has a dovish view on the Australian economy and keeps interest rates unchanged, or cuts them, it is seen as bearish for AUD.
Read more.Last release: Tue Nov 05, 2024 03:30
Frequency: Irregular
Actual: 4.35%
Consensus: 4.35%
Previous: 4.35%
Source: Reserve Bank of Australia
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD stays weak below 1.0500 due to risk-off mood
EUR/USD remains depressed below 1.0500 in Tuesday's European morning as US President-elect Trump’s tariff plans dampen the market sentiment and keep the US Dollar broadly bid. The Euro struggles due to growing Euro area economic concerns and increased dovish ECB bets.
GBP/USD consolidates losses near 1.2550 ahead of BoE's Pill, Fed Minutes
GBP/USD struggles near 1.2550 in European trading on Tuesday, following a slump to the 1.2500 area. The US Dollar holds on to modest gains amid Trump's tariffs threat-driven cautious mood, keeping the pair undermined ahead of BoE Pill's speech and Fed Minutes.
Gold price defends $2,600 ahead of FOMC minutes; not out of the woods yet
Gold price retains its negative bias for the second straight day and trades just above a one-week low during the first half of the European session on Tuesday. The growing conviction that Donald Trump's expansionary policies will reignite inflation and limit the scope for the Fed to cut interest rates further triggers a fresh leg up in the US Treasury bond yields.
Trump shakes up markets again with “day one” tariff threats against CA, MX, CN
Pres-elect Trump reprised the ability from his first term to change the course of markets with a single post – this time from his Truth Social network; Threatening 25% tariffs "on Day One" against Mexico and Canada, and an additional 10% against China.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.