Both RBA and RBNZ face similar issues regarding momentary policy. Low inflation/wage growth, high household debt and high house prices are just a few, but they provide contrasting headwinds for both central banks whilst interest rates remain at record low levels. And it is these similar challenges or lack of a diverging theme which can keep AUD/NZD tracking in a sideways range at times, which is what we are experiencing right now.
Price action on AUD/NZD is essentially trading sideways but there is potential for volatility to rise if there are any surprises in RBNZ’s biannual financial stability review. That the RBNZ acting governor, Grant Spencer will also testify to the parliamentary select committee after the report also provide potential for volatility to rise and, with any luck, a directional move on AUD/NZD.
