AUD/NZD marches towards 1.1200 with eyes on RBA Interest Rate announcement

• AUD/NZD extends the previous day’s rebound from a fortnight low.
• Hawkish hopes from the RBA favor bulls ahead of the event.
• RBA is expected to announce 0.50% rate hike, focus will be on rate statement.

AUD/NZD defends bulls around 1.1160 ahead of the key Reserve Bank of Australia (RBA) monetary policy announcements during Tuesday’s Asian session. In doing so, the cross-currency pair takes clues from the hawkish hopes of the Aussie central bank, as well as the market’s cautious optimism.

While portraying the mood, the S&P 500 Futures rise 0.40% to 3,940 at the latest while the US 10-year Treasury yields seesaw around 3.20% after the softer end to the week’s trading, considering the week-start holiday in the US.

It should be noted that downbeat figures from Australia’s largest customer China and at home fail to push back the buyers amid expectations of stronger rate hikes by the RBA.

That said, China’s Caixin Services PMI dropped to 55.0 in August, versus 55.5 in prior readings. In doing so, the private activity gauge traced the major PMIs from the dragon nation that recently signaled pessimism for the world’s largest industrial player.

At home, the AiG Performance of Construction Index and S&P Global Services PMI for August improved in August while TD Securities Inflation dropped to -0.5% during the stated monthly, versus 1.2% prior. Further, Australia’s ANZ Job Advertisements improved to 2.0% compared to -1.1% prior whereas the Company Gross Operating Profits for the second quarter (Q2) rose past 4.0% market forecast to 7.0%, compared to 10.2% previous readings.

Elsewhere, the energy crisis in Europe and the escalating US-China tussles seem to have probed the AUD/NZD prices ahead of the RBA’s verdict. Market forecasts favor the fourth 0.50% rate hike, which is mostly priced in and may gain fewer accolades if announced.

Also read: Reserve Bank of Australia Preview: Is the central bank ready to slow the tightening pace?

Technical analysis

A one-week-old resistance line, around 1.1185 by the press time, challenges the AUD/NZD pair’s rebound from the 21-DMA support, close to 1.1130 at the latest.