Bias: AUD/NZD is bullish-to-range-bound, sitting above its 90-day average and in the upper half of the three-month range, helped by improving rate expectations.
Key drivers:
- Rate gap: The RBA has signaled potential rate hikes in 2026, while the RBNZ has been easing, widening the yield gap in favour of the Australian dollar.
- China demand: China's uneven rebound has cooled demand for Australian commodities, weighing on the AUD versus higher-yielders like NZD if risk appetite shifts.
- Upcoming Australian CPI release: Inflation data due this month could shift policy expectations and support the AUD if inflation holds firm.
Range: AUD/NZD is expected to drift within the recent three-month range, with a possible test of the upper boundary but not a break.
What could change it:
- Upside risk: A hotter-than-expected Australian CPI reading or hawkish RBA guidance lifting rate expectations.
- Downside risk: A renewed downturn in Chinese demand for Australia’s exports or a sharper-than-anticipated RBNZ easing path weighing on NZD.