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AUD/USD gains 16 pips as NZD jumps on RBNZ statement

  • AUD/USD tracks NZD/USD higher post-RBNZ rate decision. 
  • Kiwi spiked hard on RBNZ's hawkish interest rate forecast. 

The AUD/USD pair picked up a bid as the New Zealand dollar rose sharply after the Reserve Bank of New Zealand (RBNZ) released its monetary policy statement at 01:00 GMT. 

The Aussie dollar rose from 0.6717 to 0.6733 in the 15 minutes to 01:15 GMT. During the same time frame, the NZD/USD pair jumped from 0.6408 to 0.6462. 

The buying interest around the Kiwi strengthened as the RBNZ delivered a status quo decision with a hawkish tilt. While the bank kept rates unchanged at 1%, as expected, its forecasts for the official cash rate (OCR) showed the borrowing costs will remain unchanged throughout 2020.

With the world awash in coronavirus fears, the investors were expecting the RBNZ to open the doors for deeper rate cuts later this year. The RBNZ took a page out of its Australian counterpart - the Reserve Bank of Australia (RBA) - which kept rates steady on Feb. 4 and downplayed the bushfire crisis and the continued coronavirus scare. 

With rate decision out of the way, the focus now is on RBNZ's presser. Both NZD and AUD may extend gains if Governor Orr sounds hawkish. 

It's worth noting that the risk rebound in the equity markets is supportive of sustained gains in the AUD and NZD pairs. The S&P and Nasdaq eked out record close on Tuesday, despite the decline in tech stocks. At press time, the AUD/USD pair is trading at 0.6730 and the Kiwi is seen at 0.6463.

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