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AUD/NZD pushes to 13-year high as NZ rate outlook shifts
The Reserve Bank of New Zealand lifted its OCR to 2.75% and projected only one more quarter point this year, while the market-implied odds of an RBNZ September 28 hike rose to about 57%.
AUD/NZD rose on Wednesday toward levels last seen in 2013, pressing against a long-standing ceiling, after Australia released GDP data and New Zealand delivered its rate decision within hours, according to FXStreet.
The outlet attributed the cross move more to relative weakness in New Zealand and the NZ dollar than to broad-based strength in Australia. In the same window, NZD weakened versus the US dollar, and the FXStreet analysis estimated that NZD accounted for close to four fifths of the overall AUD/NZD shift.
New Zealand’s Reserve Bank raised its Official Cash Rate to 2.75%, and its projections included only one additional quarter-point increase later this year, which FXStreet said was a disappointment. The projected path contributed to a market repricing, with the implied probability of an RBNZ hike at the September 28 meeting rising to roughly 57% from about 48% beforehand.
FXStreet also pointed to mixed underlying demand in Australia’s GDP release, with household spending up 0.4% and discretionary strength concentrated in electric and hybrid vehicle purchases, while essential spending fell 0.3% and private investment was flat. Australia’s annual growth decelerated from 2.5%, and the Reserve Bank of Australia has said growth needs to slow for inflation to fall, making an upside growth surprise a less clear signal for further tightening.