Ella 
In Asia on Wednesday, the AUD/NZD broke its three-day losing streak and traded around 1.0990. The Reserve Bank of New Zealand unexpectedly decided to cut the official cash rate (OCR) by 25 basis points to 5.25% at its August meeting. Traders were looking to a press conference and a speech from Reserve Bank of New Zealand Governor Adrian Orr later in the day for further signals.
According to the summary of the Reserve Bank of New Zealand’s Monetary Policy Statement (MPS), inflation is declining and returning to the 1-3% target range. Inflation in the services sector is expected to decline further. Whether the Committee decides to adopt further accommodation will depend on whether they believe pricing behavior remains consistent with a low-inflation environment. The Consumer Price Index (CPI) is expected to remain near the target midpoint for the foreseeable future.
In terms of the Australian dollar, recent data showed that Australia’s wage growth remained at a high level in the second quarter, prompting the Reserve Bank of Australia to adopt a hawkish stance on its policy outlook. This boosted the Australian dollar and boosted the AUD/NZD cross.
Last week, Reserve Bank of Australia Governor Bullock ruled out a rate cut over the next six months. Bullock stressed that the Reserve Bank of Australia remains vigilant about inflation risks and is prepared to raise interest rates again if necessary.
