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2026-05-25 11:26:14
[Risk Appetite Improves, Boosting Australian and New Zealand Dollars as Markets Await Reserve Bank of New Zealand Decision] 1. The Australian and New Zealand dollars both rose on Monday. Investors widely anticipated an imminent resolution to the US-Iran conflict, an optimism that pushed oil prices down and boosted market risk appetite. 2. The Australian dollar rose as much as 0.6% to US$0.7172, but is currently capped by resistance around US$0.7184. The main bullish target is the recent four-year high of US$0.7272, with support at US$0.7080. 3. The New Zealand dollar rose as much as 0.56% to US$0.5881, testing resistance at US$0.5887. A successful break above this level would target US$0.5991, while support lies around US$0.58165. 4. Market expectations of a possible reopening of the Strait of Hormuz propelled the Australian dollar back from its previous decline. Previously, the Australian dollar faced selling pressure due to weak Australian employment data, which the market interpreted as a decrease in the likelihood of a short-term interest rate hike. 5. Currently, the market expects only a 12% probability of the Reserve Bank of Australia (RBA) raising interest rates by 25 basis points at its June 16 meeting. The probability of a rate hike in August has risen to about 50%, and the probability of a rate hike before the end of September has reached 80%. 6. The Reserve Bank of New Zealand (RBNZ) will hold a policy meeting on Wednesday. The market generally believes that there is an 80% probability of maintaining the interest rate at 2.25%; among the 29 analysts surveyed, only one predicted a rate hike. 7. Data from the interest rate swap market shows that the probability of a rate hike in July is about 80%, and a rate increase to 2.50% in September has already been fully priced in. The market expects interest rates to rise to 3.50% over the next year or so. 8. Analysts point out that the RBNZ will almost certainly raise its inflation forecast and the official overnight cash rate (OCR) projection path at this meeting. 9. Westpac New Zealand Chief Economist Kelly Ekhold said the Reserve Bank of New Zealand is expected to have a heated debate this week about whether to raise the OCR to 2.50%.
