Australian Dollar declines against New Zealand Dollar despite RBA rate hike
AUD/NZD extends its losses for the second successive day, trading around 1.2430 during Asian hours on Tuesday. The currency cross loses ground as the Australian Dollar (AUD) depreciates after the Reserve Bank of Australia (RBA) decided to raise its cash rate to 4.85%, from 4.6%.
The Reserve Bank of Australia (RBA) recently hiked its interest rate by 25 basis points to 4.85%, its highest level since 2008. However, Prashant Newnaha from TD Securities views this move as a conditional pause rather than the start of another tightening cycle. The RBA's decision was not unanimous, with three members favoring to keep rates at 4.60%.
This, along with a softer outlook on growth, suggests that the RBA may hold rates for an extended period. Newnaha expects the earliest rate cut to occur in November 2027, but an earlier cut could be possible if unemployment and housing activity deteriorate sharply. As a result, Newnaha anticipates the Australian Dollar (AUD) to underperform into the year-end.
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