The broad Dollar rebound was reinforced by the drop in New Zealand inflation, released on Wednesday, which is consistent with the RBNZ remaining on hold and indeed being finished with its tightening cycle. 

In recent days, the New Zealand Dollar has underperformed the Australian Dollar as well with global growth optimism helping provide AUD with greater support. That reversed somewhat briefly on Wednesday but we continue to see scope for AUD/NZD to advance further and today’s employment data will help. 

We see risks skewed to inflation coming down more quickly and the market gradually starting to price for rate cuts in 2024. Coupled with a poor external position we continue to see risks of underperformance relative to other G10 currencies.