AUDNZD recovers above 1.0900 as RBA hawkish wagers surge

The AUDNZD pair has experienced renewed demand after falling below 1.0884 in the early Asian session. The asset has recaptured the round-level obstacle of 1.0900 as wagers on the continuation of the rate hike by the Reserve Bank of Australia (RBA) surged. In the lack of a significant catalyst that could propel the cross in a definite direction, the cross is primarily trading sideways.

Meanwhile, analysts at Goldman Sachs have presented a hawkish outlook on future RBA interest rate decisions. "Against the backdrop of such a big and persistent inflation overshoot, we were shocked by the RBA's October decision to halt the pace of rate hikes - especially before the policy rate had hit the lower bound of their estimate for the nominal 'neutral rate', which is between 3.00 and 4.50%."

Concerning forward guidance, the investment banking business says that RBA's more frequent board meetings offer RBA Governor Philip Lowe a potential opportunity to synchronize with the global policy tightening tempo.

The RBA's monetary policy statement released grim predictions for Gross Domestic Product (GDP) outlook last week. In addition, short-term inflation expectations remained elevated at approximately 8%, as inflationary pressures in the Australian region have not yet shown signs of abating.

On the New Zealand front, investors anticipate the Thursday release of the Business NZ PMI data. The economic data is anticipated to be 52.7, up from 52.0 in the previous edition. However, inflation projections for the next two years will be closely monitored beforehand. Globally, price pressures are projected to continue significant in CY2023, driven by growing service and commodity costs. An increase in long-term inflation forecasts could increase market volatility.