Antipodean weakness
Many of the currencies that would have in years gone by been described as high beta, high yielding currencies, are now carving the way for monetary normalisation. The weakness seen in the Kiwi and Aussie Dollars since the start of the year is further emphasising the changing role of AUD and NZD within the market. Gone are the days of investors seeking access to these markets in pursuit of exceptionally high growth, high interest economies, crowding out market demand. Looking at the market today, data continues to suggest a pause from the RBA and RBNZ could be on the cards.
In Australia, the inflation reading for May published this month recorded below expectation at 5.6% year-on-year. Month-on-month, inflation was negative. The next RBA decision is scheduled for Tuesday. Looking back at the June decision, which saw the bank publish only a marginal decision to hike, this data will likely be sufficient to usher in a pause to Australia’s interest rate hiking cycle. The RBNZ decision follows one week later and with a dovish hike still ringing in the ears of markets from the last decision, markets will be watching for any signal of the terminal rate having been reached.
The dovish tilt to both central banks will likely continue to undermine the New Zealand and Australian Dollars. However, as we have seen with other economies that were quick to raise rates and then pause (notably Canada), persistent inflationary pressures could still force the central bank to pursue rate hikes once again. Should that be the case and the recent trend of moderating inflation and inflation-affiliated data be threatened, we could see a rapid reversal in this trend.
Discussion and Analysis by Charles Porter
Click Here to Subscribe to the SGM-FX Newsletter
Related Insights
Daily Brief – Missing haven
Charles Porter
Tue 7 Apr 2026
Missing haven At the start of the year, the Franc had performed well as a safehaven. As a result of political and economic developments in Japan, the Yen was not abiding by its usual safehaven form. Therefore, defensive plays within FX only had two credible places to go: the US Dollar or the Swiss Franc. […]
Daily Brief – Battle of the banks
Charles Porter
Thu 2 Apr 2026
Battle of the banks Market volatility continues amidst unclear messaging from both sides of the conflict in Iran. The President’s position has continued to flit between seemingly concrete positions of absolutely tangible progress and bombing the nation back ‘to the Stone Ages’. Since the start of the war, smarter money has acknowledged that predicting the […]
Daily Brief – Questioning Truth
Charles Porter
Tue 24 Mar 2026
Questioning Truth Adopting the same handle as his now rather redundant X account, @realDonaldTrump shocked markets yesterday using his own social media platform, Truth Social. During Trump 1.0, the legitimacy of a President using an unofficial X, then Twitter, account was questioned. Now under Trump 2.0, it’s seldom questioned when he is the majority shareholder […]
