AUD/NZD fades bounce off 3.5-month low on RBA’s 0.25% rate hike, Lowe's speech, RBNZ’s Orr eyed

• AUD/NZD retreats from intraday high after RBA’s Interest Rate announcement.
• RBA announced a 0.25% rate hike while matching market forecasts.
• Strong NZ Building Permits previously dragged the quote to fresh multi-day low.
• RBA Governor’s speech, NZ jobs report and RBNZ’s Orr will be important to defend the buyers.

AUD/NZD fails to extend the early Asian session rebound from a multi-day low as it drops back to 1.1000 after the Reserve Bank of Australia’s (RBA) monetary policy decision on Tuesday.

RBA matches the broad expectations while easing the rate hike trajectory with the 25 basis points (bps) of a lift to the benchmark interest rate, to 2.85% at the latest.

Also read: RBA announces another 25 bps OCR rate hike in November

Earlier in the day, New Zealand’s seasonally adjusted Building Permits for September jumped by 3.8% versus -1.2% expected and -1.6% prior. The same should have drowned the AUD/NZD pair to the lowest levels since July 15 before the risk-on mood triggered the cross-currency pair’s recovery.

That said, the market sentiment improves during early Tuesday as the US Treasury yields remain sluggish. The same allows the US equity futures to print mild gains amid hopes of easing energy prices, as well as inflation.

The reason for the cautious optimism could be linked to the downbeat US data and comments from US President Joe Biden and Russian leader Vladimir Putin.

On Monday, the US Chicago Purchasing Managers’ Index and Dallas Fed Manufacturing Business Index for October came in at 45.2 and -19.4 versus 47.0 and -15.0 expected respectively.

“US President Joe Biden on Monday called on oil and gas companies to use their record profits to lower costs for Americans and increase production, or pay a higher tax rate, as he battles high pump prices with elections coming in a week,” said Reuters. On the other hand, Russia’s Putin said he can set up a gas hub in Turkey ‘quite quickly’ and was sure gas contracts will be signed. The Russian leader also added that there will be many in Europe who want to do so.

Looking forward, a speech from RBA Governor Philip Lowe will act as an immediate catalyst for the AUD/NZD traders to watch. Following that, New Zealand’s quarterly employment numbers and comments from Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr will be crucial for the pair’s direction. Should the strong fundamentals surrounding New Zealand joins hawkish comments from RBNZ and firmer NZ jobs report, the pair has a further downside to track.

Technical analysis

Although the 200-DMA defends AUD/NZD bears around 1.1005, the pair’s recovery remains elusive unless staying comfortably beyond the support-turned-resistance line stretched from November 2021, around 1.1170 by the press time.