Australian Dollar trades close to March 2013 highs against New Zealand Dollar following Aussie CPI and RBNZ

A combination of supportive factors drives a sharp advance in AUD/NZD on Wednesday.
Strong Australian consumer inflation readings bolster expectations of an RBA rate rise, lifting the AUD and the cross.
The NZD comes under heavy pressure after the RBNZ unexpectedly leaves rates unchanged, adding to the cross’s gains.

Strong Australian consumer inflation figures, alongside the Reserve Bank of New Zealand's (RBNZ) unexpected decision to keep rates on hold, trigger substantial buying in AUD/NZD during Wednesday’s Asian session. The cross reaches its highest level since March 2013 before surrendering some of its sharp intraday advance to the 1.2600 mark. Spot prices now stand at around 1.2550, nearly 1.5% higher on the day.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

A 4–3 vote saw New Zealand’s central bank unexpectedly retain the official cash rate (OCR) at 2.75% earlier today, leaving the New Zealand Dollar (NZD) under considerable selling pressure. Although the RBNZ indicated in its accompanying policy statement that tighter monetary policy would probably be needed, it stressed that this remained dependent on the economic outlook. That guidance provides little support for the NZD and does little to restrain the strong intraday rise in AUD/NZD.

By contrast, stronger-than-expected domestic consumer inflation readings prompt broad-based gains in the Australian Dollar (AUD). Further support comes from Reserve Bank of Australia (RBA) Governor Michele Bullock, who suggested that the central bank is less prepared to look through the energy-led rise in prices. Her remarks reinforce expectations of an imminent interest rate increase in November, lending additional support to the AUD and the AUD/NZD cross while keeping the balance in favour of the bulls.

Australian Dollar Posts Its Strongest Gain Against the New Zealand Dollar Today

Today’s percentage movements in the Australian Dollar (AUD) against the major currencies listed are set out below. Its largest gain was against the New Zealand Dollar.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		0.02%	0.05%	0.02%	0.09%	-0.08%	1.47%	0.11%
EUR	-0.02%		0.03%	-0.02%	0.07%	-0.09%	1.44%	0.09%
GBP	-0.05%	-0.03%		-0.04%	0.03%	-0.14%	1.42%	0.06%
JPY	-0.02%	0.02%	0.04%		0.08%	-0.08%	1.45%	0.10%
CAD	-0.09%	-0.07%	-0.03%	-0.08%		-0.16%	1.37%	0.03%
AUD	0.08%	0.09%	0.14%	0.08%	0.16%		1.55%	0.19%
NZD	-1.47%	-1.44%	-1.42%	-1.45%	-1.37%	-1.55%		-1.32%
CHF	-0.11%	-0.09%	-0.06%	-0.10%	-0.03%	-0.19%	1.32%

Percentage movements between the major currencies are displayed in the heat map. Select the base currency in the left-hand column and the quote currency in the top row. For instance, choosing the Australian Dollar on the left and following that row across to the US Dollar gives the percentage change for AUD (base)/USD (quote) in the corresponding cell.