Australian Dollar eases from July 9 high vs New Zealand Dollar; awaits Aussie GDP and RBNZ

The Australian Dollar (AUD) eased from its July 9 high against the New Zealand Dollar (NZD) as market participants awaited key economic data releases and central bank decisions. The pair initially climbed to a fresh high since July 9 during the Asian session on Monday, but struggled to build on momentum and traded just above the 1.2100 mark.

Traders were hesitant ahead of Australia's June-quarter GDP report, set to be released on Wednesday, followed by the Reserve Bank of New Zealand's (RBNZ) monetary policy decision. The NZIER Monetary Policy Shadow Board suggested the RBNZ may increase the OCR by 25 basis points in September, with further hikes expected by year-end.

This was seen as a tailwind for the NZD and a cap for the AUD/NZD pair. Meanwhile, the AUD drew support from the Reserve Bank of Australia's (RBA) hawkish outlook, with Governor Michele Bullock stating that a rate cut is not on the agenda and additional tightening remains "quite possible" if inflation fails to cool as projected.

This view was echoed in minutes from the August RBA meeting, along with China's better-than-expected PMIs, offering support to the China-proxy AUD and the AUD/NZD cross. China's Manufacturing PMI rose to 49.8 in August, while the Non-Manufacturing PMI held steady at 49.0, both remaining below the 50 line. This cautious market stance before key data and central bank events kept the AUD/NZD pair from extending its one-week uptrend.