Synopsis:

CIBC expects further easing from the RBA and RBNZ, but notes a divergence in tone between the two. The AUD is seen underperforming amid policy uncertainty, while the NZD is expected to weather tariff risks better and outperform the AUD. The “sell America” theme is expected to cushion broader downside for both currencies.

Key Points:

• RBA Outlook:
  The May meeting no longer resisted rate cut expectations, opening the door for another 25bp cut in July.
  Tone suggests a dovish pivot, pressuring the AUD.

• RBNZ Outlook:
  Contrasted with a “hawkish cut”, surprising markets expecting a more dovish tilt.
  Signals end of the easing cycle is near, supportive of NZD resilience.

• Tariff Backdrop:
  Ongoing US tariff uncertainty and a broader “sell America” narrative expected to limit further AUD/NZD downside.

• Targets:

  • AUD/USD: 0.63 in Q3

  • NZD/USD: 0.59 in Q3

  • AUD/NZD cross: 1.07

Conclusion:

CIBC remains bearish on AUD, seeing more RBA easing ahead, while NZD is better positioned with the RBNZ nearing its terminal rate. Relative policy paths and tariff hedging flows should keep AUD/NZD under pressure into Q3.