Australian dollar

■ The Reserve Bank of Australia unexpectedly kept interest rates unchanged, while the Reserve Bank of New Zealand hinted at possible further rate cuts. 

 
■ The decline in the Australian dollar relative to the New Zealand dollar showed signs of reversing in late April and may break through the 200-day moving average. 
 
    The Reserve Bank of Australia (RBA) decided to keep the policy rate at 3.85% during its meeting on the 8th. The statement explained that "to confirm that the inflation rate is moving towards the 2.5% target at a sustainable pace, it is necessary to wait for more data," demonstrating a cautious approach. In the consumer price index (CPI) from January to March, the "trimmed mean CPI"—which the Reserve Bank of Australia emphasizes—rose by 2.9% year-on-year, returning to the central bank's target range (2.0%-3.0%) for the first time since the fourth quarter of 2021. The market now almost fully expects the Reserve Bank of Australia to cut interest rates in August. If the second-quarter CPI data released on July 30 indicates further slowing of inflation, the upcoming board meeting on August 11-12 could implement a rate cut. However, the statement also noted that the labor market remains robust, and the June employment data released on the 17th will be a key factor in interest rate decisions. 
 
    In New Zealand, the Reserve Bank (RBNZ) announced on the 9th that it would maintain the policy rate at 3.25%. This marks the first pause in interest rate cuts after seven consecutive meetings. The statement mentioned that "if medium-term inflationary pressures continue to ease, further interest rate cuts are expected," and highlighted that data such as the pace of economic recovery, the persistence of inflation, and U.S. tariff policies will influence monetary policy. New Zealand's unemployment rate rose to 5.1% in the first quarter, the highest in nearly five years, and the labor force participation rate fell to 70.8%, a downward trend since the second quarter of 2023, signaling a slowdown in the labor market. Due to slow economic recovery, if the second-quarter CPI announced on July 21 is significantly below the mid-point of the central bank's target range (1.0%-3.0%), the monetary policy meeting on August 20 is likely to resume interest rate cuts. 
 
    This week, the Australian dollar edged slightly above 1.09 New Zealand dollars, reaching a three-month high amid a strong Australian dollar and a weak New Zealand dollar. Chart patterns suggest that if the May high of 1.0925 NZD is broken, a "double bottom" pattern will form, indicating a notable reversal of the AUD depreciation/NZD appreciation trend that began in late February and ended in late April. Considering the policies of the RBA and RBNZ and the economic outlook of both countries, the AUD/NZD exchange rate is expected to challenge the 200-day moving average at 1.0954 NZD and aim for the high of 1.1030 NZD recorded on April 1.