Unwinding Aussie?
In recent months the Australian and New Zealand Dollars have both been able to recover ground against a weakening US Dollar. Set backs to the progress made amongst the Antipodean currencies has largely been down to changes in global growth expectations. With the soft landing narrative still just about alive thanks to the Fed’s and PBoC’s recent measures, it is no surprise that USDNZD and USDAUD trade near their year to date lows.
Stimulus measures in China have captivated the majority of financial headlines this week. Such measures should prove positive for AUD in particular adding to the case for these currency pairs to test current support levels. However, yesterday’s inflation reading could throw a spanner in the works for regional Australasian FX. Core and nominal inflation levels recorded softer than many had expected yesterday with the year on year inflation rate to August 2024 coming in at just 2.7%.
Close watchers of the RBA will be swift to note this level is within the central bank’s target range. Rate cuts have been priced in for early next year at the RBA given that Australia observed a lower terminal rate of interest than much of the developed world. However, a swift return to target inflation rates could push the RBA into action sooner than expected. Pricing for the RBA’s meeting in early December shows a rising probability of a cut. With markets still fixated on interest rate differentials, these statistics could make the case to limit further downside projections within USDAUD and by association at least USDNZD.
Discussion and Analysis by Charles Porter
Click Here to Subscribe to the SGM-FX Newsletter
Related Insights
Daily Brief – The Hassett Trade
Charles Porter
Thu 4 Dec 2025
The Hassett Trade Not another one, I hear you say. So far this year we’ve seen bandied around the TACO trade, the Trump put, FOMO trade, the MEGA trade, surely there isn’t another to surface before year end?! Wrong. The so-called Hassett trade is that which is currently pushing the Dollar lower but coming to […]
Daily Brief – A week out
Charles Porter
Tue 2 Dec 2025
A week out Markets are now in their final few trading days ahead of a Fed blackout that will precede the Reserve’s decision next Wednesday. The US government shutdown, despite now feeling like a distant memory, continues to weigh on the Dollar and market pricing in general. In particular, as we approach the decision next […]
Daily Brief – OBR: Oops, Budget Released
Charles Porter
Thu 27 Nov 2025
OBR: Oops, Budget Released Traders who might have been out grabbing a coffee ahead of the planned publication of the UK budget yesterday afternoon would have returned to chaos. Reuters, a popular financial news agency, revealed that although not directly discoverable via a link on their website, the OBR had published its report on Chancellor […]
