The AUD-USD and NZD-USD FX pairs are up for some volatility this week. The upcoming Reserve Bank of Australia (RBA) meeting is stirring speculation among analysts and traders alike. Scheduled for Tuesday, May 7, 2024, at 2:30 pm Sydney time, all eyes are on the cash rate, currently at 4.35%. Here’s what you need to know:
- Most analysts anticipate the RBA to uphold the cash rate at 4.35%
- Capital Economics suggests a 25 basis point rate hike, citing persistent inflation
- Historical data indicates the RBA’s tendency to raise rates when quarterly inflation surpasses 1%
Key Economic Data for Australia and New Zealand
As the financial landscape braces for potential shifts, key economic indicators from Australia and New Zealand offer crucial insights.
Australia
- Monthly inflation gauge reflects a marginal 0.1% increase month-on-month
- Job vacancies exhibit a notable uptick, rising by 2.8% month-on-month
- Treasurer Chalmers projects optimism about achieving a budget surplus, injecting a dose of positivity into the economic narrative.
New Zealand
- The ANZ Commodity Price Index for April 2024 paints a slightly rosier picture, recording a 0.5% month-on-month increase. This translates to a 2.7% gain in New Zealand dollar terms, suggesting resilience in the export sector.
- The NZD Trade Weighted Index, however, experienced a 1% dip as commodity prices surged, highlighting potential challenges for the NZD.
- In light of stubborn inflation and tepid growth, the OECD’s recommendation for the Reserve Bank of New Zealand (RBNZ) emphasizes a cautious approach to monetary policy, advocating for fiscal consolidation and prudent budget management. Oh, and something that will likely ruffle Kiwi feathers: a change to NZ’s capital gains tax.
Both the AUD and NZD are up against a rock (U.S. inflation data) and a hard place (China). It’s going to be interesting to see how the Aussie and Kiwi respond to their own internal inflation numbers over the next few weeks.
