Advancing Ahead Of RBA Rate Announcement

With participants waiting for the upcoming RBA monetary policy decision, AUD/NZD has added 18 pips thus far and last sits at NZ$1.0976.

• The swaps market prices ~13 pips worth of tightening come the end of today's RBA meeting. We are leaning towards a 15bp cash rate target hike, but admit that it is a close call.
• The next meeting of RBNZ MPC is slated for May 25. The key preceding risk events include quarterly labour market data (May 4) and Budget (May 19).
• AU/NZ 2-year swap spread has crept higher, reaching levels not seen since early August 2021, and last sits at around -94bp.
• The key technical focus falls on the psychologically significant NZ$1.1000 figure, which capped intraday gains on Apr 21. A break here would draw attention to Aug 18, 2020 high of NZ$1.1044.
• On the flip side, a sell-off past the NZ$1.0830-25 area, which cushioned losses on Apr 7, Apr 13 & Apr 25, would mark the formation of a double top pattern, lending support to the bearish case.