AUD/NZD climbs confidently above 1.0800 as focus shifts to RBA Lowe’s speech

• AUD/NZD has started balancing above 1.0800 as investors are awaiting the RBA Lowe’s speech for further cues.
• The street is anticipating a neutral RBA interest rate policy stance for June after a surprise 25 bps rate hike in May.
• RBNZ Silk warned that the central bank must be watchful of over-tightening policy.

The AUD/NZD pair has shifted its auction comfortably above the round-level resistance of 1.0800 in the early Tokyo session. The asset has picked strength ahead of the speech from Reserve Bank of Australia (RBA) Governor Philip Lowe.

RBA Governor Philip Lowe is expected to deliver guidance about the likely monetary policy action next week. The street is anticipating a neutral interest rate policy stance for June after a surprise 25 basis points (bps) rate hike announcement in May.

Australia’s inflation is consistently decelerating for the past three months due to higher interest rates from the RBA. The monthly Consumer Price Index (CPI) has already decelerated to 6.3% in March from a whopping 8.4% figure being recorded in December. Meanwhile, Australia’s retail demand remained stagnant in March as higher cost of living and bulky interest rates have squeezed deep pockets of households. A sheer decline in households’ spending is expected to weigh heavily on inflationary pressures further.

On Wednesday, Australia’s monthly CPI (April) will be keenly watched. The economic data is expected to accelerate marginally to 6.4% vs. the prior release of 6.3%. Sticky inflation figures could force the RBA to go hawkish ahead.

Meanwhile, the New Zealand Dollar has failed to maintain its strength despite a significant increase in interest rates by the Reserve Bank of New Zealand (RBNZ). The RBNZ has hiked its Official Cash Rate (OCR) to 5.5% as inflationary pressures seem reluctant in releasing heat. Last week, RBNZ Assistant Governor Karen Silk warned that the central bank must be watchful of over-tightening policy and that it can hold now and sees what develops.