Both AUD and NZD ended last week on a strong footing amid broadly positive risk sentiment, but this week might bring more mixed winds for the antipodeans, Danske Bank's FX analyst Mohamad Al-Saraf reports.
RBNZ to continue its cutting cycle with another 50bp reduction
"The Reserve Bank of Australia (RBA) is expected to deliver its first 25bp rate cut early Tuesday morning. Markets price in about 90% probability for the move, but especially if paired with guidance of more cuts to come, the start of the easing cycle could weigh on AUD FX."
"Less than 24 hours later the Reserve Bank of New Zealand (RBNZ) is set to continue its cutting cycle with another 50bp reduction according to both consensus and markets. But having already reduced policy restraint by 125bp before this week, any hawkish forward guidance about slowing the pace of cuts in the coming meetings could provide some tailwind to NZD."
"We remain short AUD/NZD as part of our FX Top Trades 2025."