AUD/NZD is sliding following RBA on hold and staying so untl 2-3% inflation target

• AUD/NZD bulls take a hit on a less hawkish RBA outcome. 
• Commodity-FX is getting support in general. 

AUD/NZD is a touch lower on the Reserve Bank of Australia's interest rate decision. At its meeting today, the Board decided to maintain the cash rate target at 10 basis points and the interest rate on Exchange Settlement balances at zero per cent. At 1.0738, AUD/NZD is down some 0.18% and has marked a post went low of 1.0712 so far. 

In the details of the statement, the central bank says that ''the Board is prepared to be patient as it monitors how the various factors affecting inflation in Australia evolve.''

Key notes

''We will not raise the cash rate until real inflation is consistently within the target range of 2% to 3%.''

''There are uncertainties about how persistent the pick-up in inflation will be... At the same time, wages growth remains modest and it is likely to be some time yet before growth in labour costs is at a rate consistent with inflation being sustainably at target.''

''Inflation has picked up more quickly than the RBA had expected but remains lower than in many other countries... The CPI inflation rate will spike higher than this due to the higher petrol prices resulting from global developments.''

''The Australian economy remains resilient and spending is picking up following the Omicron setback... The resilience of the economy is evident in the labour market.''

Commodity-FX bid

Meanwhile, analysts at Rabonak explained that some of the specifics of this Ukraine and Russia conflict including the fears around the supply of various commodities, ''means that the winners and losers in the FX space are different than in previous crises.''

''Ordinarily, this would suppress demand and reduce risk appetite,'' the analysts noted. 

''Higher-risk currencies would tend to adjust lower in this environment and often this would include the currencies of commodity exporters.  However, Russia’s status as a large commodity exporter means that the threat of supply disruptions of oil, gas and various agricultural commodities has been amplified. The NOK has regained all the ground lost vs. the USD on the news of the invasion.''

''AUD, CAD and NZD are also recovering their poise vs. the mighty USD. The NOK and the CAD are the currencies of large oil exporters.  The AUD is usually well correlated with oil given its huge coal exports (which is a substitute good).  Australia also exports LNG. In the current environment, we expect the commodities currencies to remain well supported.''