AUDNZD recovers over 1.0900 as bets on RBA hawkishness surge

After dipping below 1.0884 in the early Asian session, the AUDNZD pair has received renewed interest. The asset has reclaimed the round-level barrier of 1.0900 as wagers on the Reserve Bank of Australia's (RBA) continued rate hike soared. In the absence of a substantial stimulus that could move the cross in a certain direction, the cross is predominantly trading in a sideways fashion.

In the meantime, Goldman Sachs analysts have offered a pessimistic prognosis for future RBA interest rate decisions. We were stunned by the RBA's October decision to suspend the pace of rate hikes, especially before the policy rate had reached the lower bound of their estimate for the nominal 'neutral rate,' which is between 3.00 and 4.50%.

Concerning forward guidance, the investment banking industry asserts that RBA's more frequent board meetings provide RBA Governor Philip Lowe with a possible opportunity to synchronize with the worldwide policy tightening pace.

Last week, the RBA's monetary policy statement issued gloomy forecasts for Gross Domestic Product (GDP). In addition, short-term inflation expectations remained elevated, hovering around 8%, as inflationary pressures in the Australian region showed no signs of abating.

On the front of New Zealand, investors anticipate the release of Business NZ PMI data on Thursday. The expected economic data is 52.7, up from 52.0 in the previous release. Nonetheless, inflation forecasts for the following two years will be constantly reviewed beforehand. In CY2023, it is anticipated that rising service and commodity prices will continue to exert considerable price pressures worldwide. A rise in inflation projections over the long run could exacerbate market volatility.