RBNZ delivers hawkish cut<\/p>\n
Across the Tasman, the RBNZ cut its official cash rate (OCR) by 25 basis points (bp) to 2.25%, as widely anticipated. This brings the RBNZ\u2019s total easing in the current cycle to 325 bp from a peak of 5.50%.<\/p>\n
The RBNZ noted that economic activity and labour market indicators are improving:<\/p>\n
\u2018Committee members discussed an improvement in near-term indicators of economic activity from their lows in the June quarter, suggesting a return to modest GDP growth in the September quarter. Feedback from recent business visits suggests that, while activity remains weak, demand has stabilised.\u2019<\/p>\n
The committee also acknowledged early signs of stabilisation in labour demand, with job vacancies and total hours worked increasing in the September quarter, resulting in a shift in the RBNZ\u2019s forward guidance from dovish<\/a> to data-dependent:<\/p>\n \u2018Future moves in the OCR will depend on how the outlook for medium-term inflation and the economy evolves.\u2019<\/p>\n The more upbeat commentary was reinforced by the RBNZ lowering its OCR terminal rate to 2.20% for June 2026, just below the current OCR rate of 2.25%. This is down from 2.55% in August, prior to the RBNZ\u2019s surprise 50 bp rate cut in October.<\/p>\n AUD\/USD technical analysis<\/p>\n Today\u2019s gains in AUD\/USD are in line with the outlook outlined in yesterday\u2019s AUD\/USD update here<\/a>.<\/p>\n In that article, we stated that providing AUD\/USD \u2018remains above the 0.6440 \u2013 0.6420 support band<\/a>, a recovery remains the base-case scenario.\u2019<\/p>\n Conviction in this view has increased after AUD\/USD regained the 200 day moving average<\/a>, currently near 0.6460, and then rallied above 0.6475, returning to the safety of its seven-month uptrend channel.<\/p>\n