New Zealand inflation hits NZD as AUD rallies on RBA

  • New Zealand inflation weakens: The prospects of further rate hikes have reduced 
  • A change in structure for the RBA: Monetary policy decisions will now be more independent
  • NZD weakens, AUD positive: The NZD is underperforming major forex whilst the AUD is stronger.
  • Risk appetite is cautious in equities: European indices have opened mixed, US futures are lower
  • Caution also in metals and oil: In commodities, gold is positive with silver weaker, oil continues to fall back.

A focus on the antipodean currencies 

Major forex continues in its state of choppy caution today.

However, there is news from “down under” which is driving moves on the NZD and AUD today:

  • New Zealand inflation was lower than expected in Q1
  • The Reserve Bank of Australia is to change the way its monetary policy decisions are made 

Lower NZ inflation reduces the likelihood of further hikes

There has been a sharp decline in New Zealand inflation in the first quarter of 2023.

Inflation has dropped to 6.7% (from 7.2% in Q4 2022).

This was much lower than the small decline to 7.1% that had been forecast.

There has been a sharp decline in New Zealand inflation in the first quarter of 2023.


The move was driven in the main by food price inflation (which is a theme in many countries).

Vegetables were up 22%, with cheese +9.7% and eggs up 15%.

However, pulling prices down was the decline in petrol prices, which were down -8.3% in the 12 months to March 2023.

However, interestingly, the Reserve Bank of New Zealand had been expecting a move higher to 7.3%.

After the larger-than-expected 50bps hike in the latest meeting, this now questions whether there will be too much room for further hikes above the current 5.25%.

The prospects are that one final rate hike to 5.50% could be seen in May.

A change of the structure at the Reserve Bank of Australia

The RBA has announced that it is reformating the way it makes its monetary policy decisions.

A new Monetary Policy Board (MPB) will be set up. 

  • This new board will consist of nine members including the RBA Governor (currently Phillip Lowe) but crucially six external and independent members. This will reduce the power that the governor has in decisions
  • Policy decisions will also now be 8 per year, instead of the current 11.

Markets seem to be fairly sanguine on this decision, with the AUD outperforming (albeit marginally) major forex this morning.

NZD weakens, AUD supported

The big mover today in major forex today is the weakness of the NZD.

The AUD is holding up relatively well amid broader cautious trading sentiment.


The kiwi has been ranging against the USD since November.

However, a recent strengthening of the USD alongside today’s downside in the NZD means that there could now be a test of the range lows ahead for NZD/USD.

The kiwi has been ranging against the USD since November.

After a big bearish rejection of a rally to 0.6315 the negative candles are racking up.

  • Near term support at 0.6140/0.6165 is being pressured.
  • Deteriorating moving averages suggest a negative outlook.
  • This also comes with the RSI beginning to show a deteriorating bias too.

A close under 0.6140 would suggest a test of the big multi-month support band 0.6065/0.6085. 

The initial resistance is at 0.6225.


The AUD is also ranging with the USD (over a shorter two-month period). However, the outlook is increasingly more stable.

The AUD is also ranging with the USD (over a shorter two-month period) however, the outlook is increasingly more stable.

Resistance has formed with the rejection of a rally to 0.6805, however, technical indicators are more steady.

  • Daily candlesticks are mixed to slightly positive in recent sessions.
  • The daily RSI is hovering around 50 in a neutral configuration.

The near-term support at 0.6680 needs to hold to sustain this neutral outlook within the trading range.

A move back above 0.6747 would open the 0.6805 resistance once more.


The real move is happening in the AUD/NZD cross.

Strong bull candles have been accelerating the price higher.

Strong bull candles have been accelerating the price higher. 

  • The resistance at 1.0892 is now being tested, with a close above being another barrier removed in the recovery.
  • Momentum is strong with the RSI into the mid-60s, but also with upside potential.

With the move this morning, there is a higher low at 1.0810 as initial support.


Beyond 1.0892 the next resistance is at 1.0947.

Support and resistance levels for Forex, Commodities, and Futures/Indices 

EUR/USD R2 1.1000
R1 1.0984
S1 1.0942
S2 1.0909


R2 1.2491
R1 1.2476
S1 1.2401
S2 1.2380
USD/JPY R2 137.00
R1 135.10
S1 134.39
S2 133.86


R2 2032
R1 2015
S1 1987
S2 1981


R2 25.31
R1 25.18
S1 24.80
S2 24.55
Brent Crude Oil
R2 86.10
R1 85.50
S1 83.90
S2 80.25


S&P 500 futures
R2 4198
R1 4182
S1 4147
S2 4137
DAX Index 
R2 15,950
R1 15,909
S1 15,830
S2 15,785
FTSE 100 Index
R2 7960
R1 7915
S1 7870
S2 7860

Data: MT5/IXOne

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