AUD/NZD tradesr await the RBNZ inflation expectations survey for Q3

• AUD/NZD perks up ahead of key NZ data event. 
• The RBNZ inflation expectations survey for the third quarter is eyed. 

AUD/NZD is a touch higher on the day, moving from a low of 1.1050 to a high of 1.1082 so far. The US dollar is under pressure in a correction of some of Friday's rally following the US Nonfarm Payrolls blockbuster report.  

RBNZ inflation expectations in focus

Meanwhile, today's main event for the antipodeans will be the Reserve Bank of New Zealand’s inflation expectations survey for the third quarter. This is not expected to rise materially, according to analysts at Westpac, but it will likely remain at an elevated level. The 2-year expectation was 3.29% in Q2.

On a separate note, the analysts explained that the RBNZ’s latest survey of inflation expectations came hot on the heels of the 32-year high in inflation that was reached in the June quarter. ''With that in mind, we expect the August survey will show that expectations for inflation over the coming year remain elevated.''

''The bigger focus for the RBNZ will be on expectations at longer horizons (2 or more years ahead). If expectations at those horizons push higher, that would stoke concerns about more enduring inflation and wage pressures, and that would reinforce the case for further rate hikes,'' the analysts said. ''However, we think that recent developments actually point towards expectations remaining fairly steady. While still elevated, inflation looks to have peaked and prices for petrol are now falling. In addition, the OCR is now pushing into tight territory and the global economy is softening.'' 

RBA cash rate peak seen near 3.35%

 Meanwhile, turning to the Reserve Bank of Australia, traders are expecting the central bank to put through another 50bp rate hike which will be the third 50bp move in three months and the fourth hike since April, the analysts have noted. The Bank's cash rate assumption is for a year-end 2022 target rate of 3% and the RBA assumes another 115bps of hikes over the next 4 meetings. That means RBA is placing some chance of delivering a 50bps hike and 3x25bps hikes for a total of 125bps in hikes by year-end. This would take the year-end 2022 cash rate to 3.10%.  The exchange rate is assumed to be stable.  The WIRP suggests a 25 bp hike on September 6 is fully priced in, with around 45% odds of a larger 50 bp move. The swaps market, nevertheless, sees 150 bp of tightening over the next 12 months which would see the cash rate peak near 3.35%.