Next week the Reserve Bank of Australia meet on Tuesday June 06 at 0530UK time.
The expectations from short term interest rate markets are that rates will be unchanged at 3.85%. However, interest rate markets still see a terminal rate of over 4% ahead for the RBA. If the RBA surprise interest rate markets and communicate that they have finished their rate hiking cycle then the AUD could lose value against the NZD.
This makes the seasonal pattern of weakness for the AUDNZD very interesting.
Over the last 15 years the AUDNZD pair has lost value nearly 70% of the time between June 13 and July 10. The AUDNZD paid has seen an average fall of -0.45% with the largest fall -1.85% in 2014.
So, would a signal from the RBA that they have finished hiking rates send the AUDNZD lower next week?
Major Trade Risks:
The major near term trade risk here is if the RBA surprise markets again with another rate hike. Remember headline inflation is still 7% y/y and core inflation 6.6%, so the RBA will likely be reluctant to signal the end of further rate hikes
Remember, don’t just trade it, Seasonax it!