MUFG’s Derek Halpenny and Abdul-Ahad Lockhart report that the AUD/NZD rally may have peaked as rate differentials begin to turn. They stress that the Reserve Bank of New Zealand (RBNZ) signalled forthcoming hikes, while the Reserve Bank of Australia (RBA) can pause longer.
The Aussie Dollar finally tripped on Wednesday, dropping nearly 2% against the New Zealand Dollar. AUD/NZD had been grinding to generational highs near 1.2300, fuelled by a story of relative central bank divergence that always looked a little overcooked.
The Australian Dollar (AUD) ticks up against the New Zealand Dollar (NZD) on Wednesday, extending its rally to 1.2230 for the first time since April 2013, before pulling back to levels near 1.2200 at the time of writing.