RBA and RBNZ Rate Hikes Send AUD/NZD to a Crossroads
The Reserve Bank of Australia (RBA) and the Reserve Bank of New Zealand (RBNZ) both raised interest rates this week, leaving the AUD/NZD currency pair at a crucial juncture.
The RBA's decision to hike rates was driven by Australia's Q2 GDP growth exceeding expectations, pushing the market-implied probability of a September rate increase from 48% to 57%. The central bank has also flagged concerns over inflation risks tied to Middle East-driven energy costs and rising Australian bond yields.
The RBNZ delivered its own 25bp hike to 2.75%, with markets pricing around a 30% chance of another rate increase this year, despite the central bank's projections signaling a likely pause in October before potentially resuming in December.
The AUD/NZD chart shows the pair has been consolidating above the 0.236 retracement level near 1.22127, caught between a shorter-term descending trendline and the broader medium-term descending trendline that has capped the pair since late June.