The dovish RBNZ gave AUD/USD an initial boost, spiking it through the daily cloud base and 55-DMA as AUD/NZD rallied, but markets are giving into suspicions that the RBA could eventually follow New Zealand's example. AUD/USD has erased all of its gains and the pair is down on the day.
The U.S. dollar's broad bid is one weight, but the RBNZ is also casting a long shadow.
The RBNZ lowered its forecast for the December 2019 OCR to 1.8 percent from 1.9 percent and pushed rate hike forecasts to late 2020.
In a Bloomberg article RBNZ Assistant Governor McDermott fanned dovish flames by noting chances of an interest cut have increased. Click here
Australia would be hard pressed to escape this fate.
A slower growth path could force the RBA to take on a dovish tone at some point, while also pulling back on rate hike expectations.
That would further undermine the allure of AUD/USD.
The pair's consolidation of long-term losses is likely to persist and should resolve with a break to new trend lows.
chart: Click here