RBNZ delivers hawkish cut
Across the Tasman, the RBNZ cut its official cash rate (OCR) by 25 basis points (bp) to 2.25%, as widely anticipated. This brings the RBNZ’s total easing in the current cycle to 325 bp from a peak of 5.50%.
The RBNZ noted that economic activity and labour market indicators are improving:
‘Committee members discussed an improvement in near-term indicators of economic activity from their lows in the June quarter, suggesting a return to modest GDP growth in the September quarter. Feedback from recent business visits suggests that, while activity remains weak, demand has stabilised.’
The committee also acknowledged early signs of stabilisation in labour demand, with job vacancies and total hours worked increasing in the September quarter, resulting in a shift in the RBNZ’s forward guidance from dovish to data-dependent:
‘Future moves in the OCR will depend on how the outlook for medium-term inflation and the economy evolves.’
The more upbeat commentary was reinforced by the RBNZ lowering its OCR terminal rate to 2.20% for June 2026, just below the current OCR rate of 2.25%. This is down from 2.55% in August, prior to the RBNZ’s surprise 50 bp rate cut in October.
AUD/USD technical analysis
Today’s gains in AUD/USD are in line with the outlook outlined in yesterday’s AUD/USD update here.
In that article, we stated that providing AUD/USD ‘remains above the 0.6440 – 0.6420 support band, a recovery remains the base-case scenario.’
Conviction in this view has increased after AUD/USD regained the 200 day moving average, currently near 0.6460, and then rallied above 0.6475, returning to the safety of its seven-month uptrend channel.
These developments open the door for AUD/USD to test initial resistance at 0.6520, with scope to medium-term resistance in the 0.6620 – 0.6630 area.
AUD/USD daily candlestick chart
