AUD/NZD slides to near 1.1440 as RBA holds OCR steady at 3.6%, as expected
- AUD/NZD falls sharply to near 1.1440 after the RBA held interest rates steady at 3.6%.
- The RBA was expected to leave its OCR unchanged amid strong inflation growth.
- The New Zealand Dollar (NZD) has been outperforming its peers as the RBNZ is expected to halt its monetary-easing campaign.
The AUD/NZD pair falls sharply to near 1.1440 as the Reserve Bank of Australia (RBA) has kept its Official Cash Rate (OCR) steady at 3.6%. The RBA was expected to do so as inflation in Australia grew at a faster pace in the third quarter of the year.
Australian Dollar Price Today
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the weakest against the Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.08% | -0.03% | -0.05% | -0.05% | 0.07% | -0.08% | -0.11% | |
| EUR | 0.08% | 0.04% | 0.02% | 0.02% | 0.14% | -0.01% | -0.03% | |
| GBP | 0.03% | -0.04% | 0.00% | -0.02% | 0.09% | -0.05% | -0.07% | |
| JPY | 0.05% | -0.02% | 0.00% | 0.00% | 0.11% | -0.04% | -0.06% | |
| CAD | 0.05% | -0.02% | 0.02% | -0.00% | 0.11% | -0.04% | -0.05% | |
| AUD | -0.07% | -0.14% | -0.09% | -0.11% | -0.11% | -0.14% | -0.16% | |
| NZD | 0.08% | 0.00% | 0.05% | 0.04% | 0.04% | 0.14% | -0.02% | |
| CHF | 0.11% | 0.03% | 0.07% | 0.06% | 0.05% | 0.16% | 0.02% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).
In the July-September period, price pressures grew by 3.2% on an annualized basis, faster than the 2.1% growth seen in the second quarter this year. Ahead of the monetary policy announcement, traders were also anticipating that the RBA could announce an interest rate hike through the mid of 2026, with inflation proving to be persistent.
RBA Governor Michele Bullock also stated in her testimony before the Parliamentary committee earlier this month that monetary policy adjustments would be needed if inflation proves to be persistent.
Going forward, the major trigger for the Australian Dollar (AUD) will be the labour market data for November, which will be released on Thursday. The employment data will influence market expectations for the RBA’s monetary policy outlook.
The labor market report is expected to show that the economy created 20K jobs, lower than 42.2K in October. The Unemployment Rate is seen rising to 4.4% from the prior reading of 4.3%.
Meanwhile, the New Zealand Dollar (NZD) outperforms across the board on expectations that the Reserve Bank of New Zealand (RBNZ) is done with lowering interest rates after reducing them by 25 basis points (bps) to 2.25% in the monetary policy announcement later in November.
RBA FAQs
The Reserve Bank of Australia (RBA) sets interest rates and manages monetary policy for Australia. Decisions are made by a board of governors at 11 meetings a year and ad hoc emergency meetings as required. The RBA’s primary mandate is to maintain price stability, which means an inflation rate of 2-3%, but also “..to contribute to the stability of the currency, full employment, and the economic prosperity and welfare of the Australian people.” Its main tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will strengthen the Australian Dollar (AUD) and vice versa. Other RBA tools include quantitative easing and tightening.
While inflation had always traditionally been thought of as a negative factor for currencies since it lowers the value of money in general, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Moderately higher inflation now tends to lead central banks to put up their interest rates, which in turn has the effect of attracting more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in the case of Australia is the Aussie Dollar.
Macroeconomic data gauges the health of an economy and can have an impact on the value of its currency. Investors prefer to invest their capital in economies that are safe and growing rather than precarious and shrinking. Greater capital inflows increase the aggregate demand and value of the domestic currency. Classic indicators, such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can influence AUD. A strong economy may encourage the Reserve Bank of Australia to put up interest rates, also supporting AUD.
Quantitative Easing (QE) is a tool used in extreme situations when lowering interest rates is not enough to restore the flow of credit in the economy. QE is the process by which the Reserve Bank of Australia (RBA) prints Australian Dollars (AUD) for the purpose of buying assets – usually government or corporate bonds – from financial institutions, thereby providing them with much-needed liquidity. QE usually results in a weaker AUD.
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the Reserve Bank of Australia (RBA) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the RBA stops buying more assets, and stops reinvesting the principal maturing on the bonds it already holds. It would be positive (or bullish) for the Australian Dollar.
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