AUD/NZD dives to one-week low, around 1.1030 after RNBZ’s expected 50 bps rate cut

• AUD/NZD met with heavy supply after the RBNZ announced its policy decision. 
• The NZD rallies across the board in the absence of more dovish RBNZ signals.
• Softer Australian CPI and US-China trade war fears continue to weigh on the AUD.

The AUD/NZD cross attracts heavy selling after the Reserve Bank of New Zealand (RBNZ) announced its policy decision and dives to a one-week low, around the 1.1030 region during the Asian session on Wednesday. 

As was widely expected, the RBNZ lowered the Official Cash Rate (OCR) by another 50 basis points (bps) from 4.75% to 4.25% at the conclusion of the November policy meeting. This seems to have disappointed some investors anticipating an even bigger rate cut and provides a strong boost to the New Zealand Dollar (NZD), which, in turn, drags the AUD/NZD cross lower for the third straight day. 

Meanwhile, the central bank, in the accompanying Monetary Policy Statement (MPS), said that the economic growth could recover gradually from late 2024 due to lower interest rates, but the timing and speed of recovery remain uncertain. The RBNZ further noted that core inflation is converging toward the 1–3% target range and that subdued domestic demand has eased inflationary pressures.

The Australian Dollar (AUD), on the other hand, continues with its relative underperformance on the back of the softer domestic Consumer Price Index (CPI), which fell short of expectations and held steady at the 2.1% YoY rate in October. Apart from this, renewed US-China trade war fears turn out to be another factor undermining the China-proxy Aussie and exerting pressure on the AUD/NZD cross.