AUD/NZD prints four-day uptrend above 1.0400 despite RBNZ rate hike

• AUD/NZD seesaws on RBNZ rate hike but the bulls hold controls.
• RBNZ matches market forecast of 0.25% rate hike, Australia’s Construction Work Done for Q3 improves.
• Market sentiment dwindles, Treasury yields grinds higher, stock futures struggle to keep rebound.

AUD/NZD remains on the front foot for the fourth consecutive day following the Reserve Bank of New Zealand (RBNZ) interest rate decision on early Wednesday. The cross-currency pair takes the bids to refresh one-week high near 1.0440 by the press time.

The AUD/NZD run-up could be linked to the RBNZ’s failures to surprise markets while announcing a widely anticipated 25 basis points (bps) of a rate hike to 0.50%, the second rate lift in the line. RBNZ also said, “Conditional on the economy evolving as expected, the OCR would likely need to be raised above its neutral rate.”

Read: NZD/USD slumps towards 0.6900 on RBNZ’s 0.25% rate hike, Governor Orr’s speech eyed

It’s worth noting that the AUD/NZD pair was initially probing a descending trend channel breakout before the RBNZ’s verdict, matching the technical target afterward.

Read: AUD/NZD Price Analysis: The big day has arrived for this cross

In doing so, the pair sellers were cheering hawkish hopes from the RBNZ and optimism over witnessing no travel barriers in the next year. The expectations were favored by comments from a government official. “Beginning April 30th, fully vaccinated overseas visitors will be able to travel to New Zealand in stages,” the country’s COVID-19 Response Minister Chris Hipkins said in a news conference in Wellington on Wednesday. 

It’s worth noting, however, that mixed sentiment and cautious mood ahead of the key US data/events challenge the AUD/NZD bulls. That said, the US 10-year Treasury yields struggle to extend the two-day rise but the US Dollar Index (DXY) remains on the front foot around a 16-month high. Further, the S&P 500 Futures remain indecisive after bouncing off an eight-day low the previous day.

Moving on, comments from RBNZ Governor Adrian Orr, scheduled for release around 02:00 AM GMT, will be important to watch for the AUD/NZD traders. Additionally, key US data like October Durable Goods Orders, the second estimate of the Q3 Gross Domestic Product, the latest FOMC Meeting Minutes and October core PCE inflation are also crucial to follow the market’s mood and the pair’s performance in turn.

Technical analysis

A sustained break of a six-week-old resistance line, now support around 1.0400, needs validation from the 50-DMA level of 1.0435 on a daily closing basis to keep AUD/NZD buyers hopeful.