Australian, NZ dollars on edge as markets weigh Fed scenarios
FXA•RBNZ board change
Analysts noted the RBNZ on Wednesday announced that Assistant Governor Karen Silk would leave the bank in December, and she was considered to be on the hawkish side of the policy board having seen upside risks to inflation.
Rate expectations and bond market moves
Markets imply an 85% chance the Reserve Bank of Australia will raise the 4.35% cash rate by 25 basis points when it meets on September 29, and reach 4.85% by early 2027.
The hawkish outlook has combined with a rout in global debt markets to send 3-year bond futures diving to a 15-year low of 94.875 YTTc1, while 10-year yields have shot up to 5.381% AU10YT=RR.
Investors see the Reserve Bank of New Zealand raising its 2.75% cash rate to 3.0% by December, and to 3.75% by the middle of next year. The central bank itself has projected a much lower peak of 3.1%, but the recent spike in oil prices has shifted risks to the high side.
