The AUD/NZD price remained under pressure on Tuesday after the latest interest rate decision by the Reserve Bank of Australia (RBA). The pair slipped to a low of 1.1135, which was substantially lower than last week’s high of 1.1256. It remains about 8.4% above the lowest level last year.
RBA interest rate decision
The AUD to NZD exchange rate continued its bearish trend after the RBA delivered its monetary policy decision. As was widely expected, the bank decided to hike interest rates by 50 basis points to 2.35%. It was the fourth straight time that the Australian central bank decided to hike interest rates this year. In a statement, the bank committed itself to return inflation to between 2% and 3%.
Still, the bank reiterated that the path to achieving that inflation target was a narrow one and clouded in uncertainty. It therefore expects that the headline consumer price index (CPI) will average about 7.75% this year and then drop to about 4% in 2023 and 3% in 2024. The bank also reiterated that the Australian economy was doing well, with the labor market being tight. In a statement, the RBA said:
“The Board expects to increase interest rates further over the months ahead, but it is not on a pre-set path. The size and timing of future interest rate increases will be guided by the incoming data.”
Focus now shifts to the RBNZ, which is expected to raise interest rates further this month. Also, the pair will react to the upcoming Australia GDP data scheduled for Wednesday. It will also react on how quickly Australian companies are able to ramp up their natural gas production.
The daily chart reveals that the AUD to NZD exchange rate has been in an overall bullish trend in the past few months. Most recently, the pair formed an ascending channel that is shown in green. It has now moved slightly below the upper side of this channel although it remains slightly above the 25-day and 50-day moving averages.
Therefore, the AUD/NZD price will likely continue falling as sellers target the lower side of the channel a 1.1030. A move above the resistance level at 1.1200 will invalidate the bearish view.