AUD/NZD: Hawkish Momentum vs Broader Downtrend

The Reserve Bank of Australia (RBA) and the Reserve Bank of New Zealand (RBNZ) both raised interest rates this week, leaving investors to wonder what's next for the AUD/NZD currency pair.

Australia's Q2 GDP surprised to the upside, pushing the market-implied probability of a September RBA hike from 48% to 57%, with November now more than fully priced. Governor Bullock has already flagged upside inflation risks tied to Middle East-driven energy costs, and rising Australian bond yields are reinforcing that hawkish backdrop.

The RBNZ delivered its expected 25bp hike to 2.75%, the second consecutive increase after July's tightening move. Headline inflation remains elevated at 4.1%, but the central bank's own projections signal a likely pause in October before potentially resuming in December, leaving markets pricing roughly a 30% chance of another hike this year.

The AUD/NZD chart shows the pair staged a sharp rally from its low near 1.19633, riding a steep ascending trendline that powered the entire late-August advance. However, price has since consolidated above the 0.236 retracement near 1.22127, caught between short-term and medium-term descending trendlines.