AUD/NZD: Trans-Tasman Analysis and Market Reactions

AUD/NZD: Trans-Tasman Analysis and Market Reactions

The AUD/NZD currency pair has seen significant movement following the latest inflation data releases from Australia and New Zealand.

New Zealand Inflation and RBNZ Outlook

New Zealand’s annual inflation rate remained unchanged at 7.2%, leading investors to believe that inflation in the country has peaked. This expectation suggests that the Reserve Bank of New Zealand (RBNZ) may slow the pace of interest rate hikes. The next RBNZ interest rate decision is scheduled for February 22.

Australia’s Inflation Surge

In contrast, Australia’s inflation rate exceeded expectations, rising to 7.8% from the previous 7.3%. This led to a sharp increase in the Australian dollar, which reached a five-month high. Market sentiment now anticipates a ninth consecutive rate hike by the Reserve Bank of Australia (RBA) on February 7.

Impact on AUD/NZD

The diverging inflation trends have caused the AUD/NZD pair to break above the 200-EMA line. The most immediate resistance level is at 1.09600, though strong buying activity is challenging this threshold. Meanwhile, the 20-EMA level at 1.09480 is acting as key support.

Summary

With Australia’s inflationary pressures persisting and New Zealand’s rates stabilizing, the AUD/NZD pair has gained upward momentum. Traders will be closely watching upcoming central bank decisions for further market direction.