AUD/NZD retreats from multi-week top, flat lines around 1.0965 post-RBA rate decision

• AUD/NZD attracts some intraday sellers following the RBA’s expected 25-bps interest rate cut.
• More dovish RBNZ expectations keep the NZD bulls on the defensive and support spot prices.
• Traders now look forward to the post-meeting press conference for short-term impetuses.

The AUD/NZD cross surrenders modest intraday gains to a nearly four-week high, around the 1.0980-1.0985 region touched during the Asian session this Tuesday after the Reserve Bank of Australia (RBA) announced its policy decision. Spot prices, however, lack follow-through selling and currently trade around the 1.0965 area, nearly unchanged for the day.

The Australian Dollar (AUD) weakens slightly across the board in reaction to the RBA's widely expected 25-basis-point (bps) interest rate cut, which turns out to be a key factor exerting some pressure on the AUD/NZD cross. In the accompanying policy statement, the central bank acknowledged that labour market conditions have eased further in recent months, and Inflation has continued to moderate.

The central bank further noted that there is a little more clarity on the scope and scale of US tariffs, suggesting that more extreme outcomes are likely to be avoided. This might have tempered expectations for further policy easing by the RBA, which, in turn, offers some support to the AUD and the AUD/NZD cross.

In contrast, the Reserve Bank of New Zealand (RBNZ) is expected to lower the official cash rate (OCR) by 25 25bps at next week's meeting amid weak labour market data, subdued inflation expectations, and slowing wage growth. This contributes to the New Zealand Dollar's (NZD) relative underperformance against its Australian counterpart and turns out to be another factor lending support to the AUD/NZD cross.

Moving ahead, the Australian Wage Price Index on Wednesday and monthly jobs data on Thursday will influence the AUD price dynamics. Furthermore, the Chinese data dump on Friday could further infuse short-term volatility around the AUD/NZD cross during the latter part of the week. The focus, however, will remain glued to the highly anticipated RBNZ monetary policy update next Wednesday.