The downside in the NZD continues after the surprise dovish shift from the RBNZ.
It’s an eye-watering move for the AUDNZD, with the pair now testing the next major resistance hurdle at 1.1030 (which is the highs from March).
The catalyst was the more dovish RBNZ where the bank decided to lower their OCR projections, and the minutes revealed a clear dovish bias with the committee actively debating between a 25bp or 50bp cut.
The majority opted for a cautious 25bp step (but two voted for a 50bp cut), and left the door open for more easing if inflation continues to ease. The discussion of significant spare capacity and risks to consumption also underscored more downside risks to growth.
Quite surprising to see that given the recent data we’ve seen has not been nearly as bad as the decision makes it seem.
