The Australian dollar’s climb against the New Zealand dollar may have reached its peak, according to analysts who anticipate a less dovish stance from the Reserve Bank of New Zealand (RBNZ) following an expected interest rate cut this week. Strategists at both the Bank of New Zealand (BNZ) and National Australia Bank (NAB) suggest the AUD/NZD currency pair, which is currently near decade-high levels, could decline towards 1.14.
The analysts contend that the RBNZ will likely signal an end to its easing cycle after reducing rates by a quarter of one percentage point on Wednesday. This adjustment would translate to a decrease of almost 1 per cent from Friday’s closing rate of 1.15. National Australia Bank, or NAB, provides financial services to individuals and businesses. The Bank of New Zealand, or BNZ, similarly offers a range of banking, investment, and insurance services.
This potential shift would also signify the conclusion of the Australian dollar’s upward trend against the New Zealand dollar. This trend was largely driven by the substantial interest rate differential between the two countries, as the Reserve Bank of Australia (RBA) has been hesitant to lower interest rates while the RBNZ has actively pursued easing measures.
BNZ anticipates a possible narrowing of the yield gap between the Australian and New Zealand currencies, which could bolster the New Zealand dollar and restrain further gains for the AUD/NZD pair. Rodrigo Catril, a foreign exchange strategist at NAB, believes the RBNZ will implement only one rate cut, potentially mitigating further weakening of the New Zealand dollar.
