Goldman Sachs on the New Zealand budget due today – could impact AUD/NZD dynamics

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Goldman Sachs on the Australian Dollar (AUD) and New Zealand Dollar (NZD), this via eFX:

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GS expect AUD to slide vs. NZD, in summary from eFX:

  • NZD Performance: NZD has outperformed AUD recently, driven by a less direct correlation with China’s economic expectations and a significant correlation with dairy prices, New Zealand’s major export.
  • Commodity Price Support: The increase in dairy prices, with a notable rise of nearly 10% this month, has bolstered the NZD.
  • Policy Divergence: The Reserve Bank of New Zealand’s (RBNZ) unexpectedly hawkish stance in its May meeting has been a key factor in the recent AUD/NZD divergence.
  • Future Triggers: Key upcoming events that could influence AUD/NZD include the Reserve Bank of Australia’s (RBA) meeting on June 18 and New Zealand’s Q2 inflation data on July 17. Additionally, New Zealand’s government budget announcement on May 30, which may include significant stimulus measures, could further impact rate cut expectations and AUD/NZD dynamics.

While recent trends and economic indicators have supported NZD strength relative to AUD, Goldman Sachs suggests that a significant and sustained move lower in AUD/NZD would likely require greater policy divergence than currently anticipated. Near-term events, such as the upcoming RBA meeting and New Zealand’s budget, will be critical in shaping the exchange rate’s direction.

NZ budget is due at 0200 GMT, that’s 2200 US Eastern time.

This article was written by Eamonn Sheridan at

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