AUD/NZD flows - RBA talking quite hawkish, cross extending major rally
RBA speaker quite hawkish on inflation, supporting hike expectations
Cross extends the major rally, chipping away towards major projection big picture
Comments from a couple of key RBA speakers all pretty hawkish today. RBA’s Hunter currently speaking at a property conference very much emphasising risks from inflation: upside risks very much on our mind, came back from trip to US more worried about inflation than when left, question is have we done enough or do we need to do more… Earlier, RBA’s Hunter struck a similar tone, noting the board is concerned about inflation and has a low tolerance and that the board may have to raise rates if there is a sense that inflation will be stronger.
The market is already around 70% priced for a hike at the next meeting with about +40bp in total priced in to the highs, so hedged towards another move.
AUD/NZD has seen a decent pop today on the break of the 1.23~ highs to extend the major rally. On the charts, close from here are the 1.2345. 61.8% Fib, then1.2400/50 congestion area. Very big picture, the cross’ 1-1.15 10 year range break seen in Q1 had a large scale 2x projection towards 1.3.