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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

A look at AUDNZD after RBA and before RBNZ

12:36 4 April 2023

Australian dollar is one of the worst performing G10 currencies after Reserve Bank of Australia announced its latest monetary policy decision earlier today. The RBA decided to pause the rate hike cycle and keep the main interest rate unchanged at 3.60%. While such a decision was expected, wording of the RBA statement was changed so that it no longer suggests that future rate hikes are certain. Having said that, today's weakening of AUD should not come as a surprise.

Traders will be offered rate decisions from another Antipodean central bank tomorrow at 3:00 am BST - Reserve Bank of New Zealand. In this case, the market expects rates to be increased by 25 basis points with the Official Cash Rate (OCR) jumping to 5.00%. A 25 basis point rate move is fully priced in by money markets. Economists also seem to be convinced that a 25 bp rate hike is the next move - out of 21 economists surveyed by Bloomberg, 19 expect a 25 bp rate hike, 1 expects a 50 bp rate hike and 1 expects no change. This would mark another slowdown in the pace of tightening after the Bank slowed from 75 bp rate hike to 50 bp rate hikes in February. Moreover, it may also hint that the 5.5% peak OCR rate in latest RBNZ forecasts may no longer be a base case scenario with expectations swinging towards a lower terminal rate. This will be the focus of RBNZ announcement tomorrow - how much higher will the rates go. Money markets currently see a rate peak near 5.25% in December 2023.

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Taking a look a AUDNZD chart at H1 interval, we can see that the pair has been recently trading sideways. Dovish RBA decision today led to quite a steep drop on the pair. AUDNZD broke below the 1.0755 support zone and continued to move lower until it reached 1.0720 support zone (orange circle). This is an important support zone, marked with previous price reactions as well as 200-hour moving average (purple line). A break below it could pave the way for a test of recent lows in the 1.0680 area. However, a hawkish RBNZ may be needed for this scenario to materialize.

AUDNZD at H1 interval. Source: xStation5

This content has been created by XTB S.A. This service is provided by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, entered in the register of entrepreneurs of the National Court Register (Krajowy Rejestr Sądowy) conducted by District Court for the Capital City of Warsaw, XII Commercial Division of the National Court Register under KRS number 0000217580, REGON number 015803782 and Tax Identification Number (NIP) 527-24-43-955, with the fully paid up share capital in the amount of PLN 5.869.181,75. XTB S.A. conducts brokerage activities on the basis of the license granted by Polish Securities and Exchange Commission on 8th November 2005 No. DDM-M-4021-57-1/2005 and is supervised by Polish Supervision Authority.

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