AUDNZD Breaking Lower
The reversal lower in AUDNZD from YTD highs has seen the pair shedding around 6%. The recent RBA pivot has been the main driver behind the move. With the RBA cutting back the pace of its tightening program, sentiment has swung in favour of NZD for now, with the RBNZ widely expected to step up the pace of its tightening, in contrast to the RBA.
RBNZ In Focus
The market is looking for a 75% hike at the upcoming November RBNZ meeting tonight, which will mark the biggest rate hike in RBNZ history. However, given that the move is already priced in, the bigger focus will be on the bank’s forward guidance. If the RBNZ is seen sticking to hawkish guidance, hat should keep the pair pressured lower near-term. Any sign that the bank might look to slow the pace of tightening after today’s hike, however, while likely fuel some bullish correction in the pair.
The break below the rising trend line from Q4 2022 lows is an important technical development for the pair. With the retail market heavily long, there is plenty of room for the market to continue lower, in line with bearish momentum studies readings. Price is currently probing below support at the 1.0826 level. Below here, the focus is on a move down to the 1.0618 level next.