Synopsis: ANZ forecasts no change in the upcoming February Reserve Bank of Australia (RBA) meeting, suggesting a stable interest rate environment. The bank observes a pattern of AUD selling pressure ahead of RBA meetings, a trend likely to continue, influenced by global risk sentiment and recent US economic data. However, ANZ advises investors to consider long positions in AUD/NZD following the RBA's announcement, anticipating potential upside once the meeting's uncertainty is resolved.
- Steady RBA Stance Expected: ANZ predicts the RBA will maintain its current interest rate policy, aligning with the bank's cautious approach observed throughout 2023.
- Pre-RBA Meeting AUD Dynamics: Historical trends indicate a tendency for the AUD to face selling pressure leading up to RBA meetings, a pattern expected to persist.
- China's Stimulus and Economic Data: Despite China's recent stimulus announcements, persistent challenges in the Chinese economy may limit the positive impact on the AUD.
- Global Risk Sentiment's Role: The AUD's near-term direction is closely tied to global risk sentiment, particularly influenced by US labor market data and the Federal Reserve's policy outlook.
ANZ suggests a tactical approach for AUD/NZD investors, recommending patience until after the RBA's February meeting. Given the anticipated no-change policy stance and the AUD's behavior around RBA decisions, opportunities for long positions in AUD/NZD may emerge, offering potential gains once market uncertainties are alleviated. This strategy accounts for both domestic policy expectations and the broader influence of global economic indicators on AUD dynamics.