AUD/NZD declines following higher inflation figures from Australia and soft ANZ data

• The AUD/NZD declines to a low of 1.0815 after reaching a high of 1.0850 on Wednesday.
• Australian high-tier data tempers RBA's dovish expectations, while soft New Zealand data renews RBNZ policy divergence.
• Following downbeat ANZ data, the market bets over higher odds of an RBNZ rate cut in November.

The AUD/NZD was seen trading lower during Wednesday's trading session, as markets digest high-tier data from both Australia and New Zealand.

In Australia, April's Consumer Price Indxe (CPI) came in hot at 3.6% YoY, surpassing the 3.4% expectations and the previous month's 3.5%. This marked the second consecutive month of acceleration and is the highest inflation rate since November. With core inflation remaining sticky above 4%, there are strong signals that the Reserve Bank of Australia (RBA) might turn its tone to a more hawkish one.

Meanwhile, the disappointing ANZ business survey data for May became a focal point in New Zealand. The Own Activity Outlook index dropped to a low of 11.8 from 14.3 in April, hinting towards weaker growth. Recently sticky domestic inflation led to the RBNZ discussing a potential rate increase which led to a significant strengthening of the Kiwi, markets are betting that the first cut will come in November of this year, priced in by 65%.

AUD/NZD technical analysis

On the daily chart, the Relative Strength Index (RSI) remains in negative territory, indicating a robust downtrend. This is consolidated by the rising red bars of the Moving Average Convergence Divergence (MACD) histogram, which confirms the continued downward momentum.

That being said, as the pair approached oversold terrain, the pair may see a slight upward correction in the next sessions.

AUD/NZD daily chart