BofA Sees AUD/NZD Weakness on Central Bank Policy Divergence

Bank of America has issued a recommendation to sell the Australian dollar against the New Zealand dollar based on expected policy divergence between the Reserve Bank of Australia (RBA) and the Reserve Bank of New Zealand (RBNZ).

The firm notes that little economic data is expected to shift market pricing until the end of August, when the monthly inflation print will be released.

According to the CFTC net non-commercial futures positioning, NZD shorts have been only partly unwound and remain near their lowest level in five years.

Bank of America economists forecast no change in Australian interest rates until mid-2027, with rate cuts beginning in August 2027. This outlook follows a below-consensus CPI print and dovish commentary from RBA Governor Bullock.