AUD/NZD traders await the RBNZ expected to cut

• The RBNZ is is in focus, expected to cut rates. 
• Could this be the event to determine the direction of AUD/NZD?

The Reserve Bank of Australia and the Reserve Bank of New Zealand have been hot topics and were so before the trade wars re-set themselves following the tit for tat exchanges between the US and China after the US administration decided to announce extra tariffs on Chinese imports. This announcement came after the Federal reserve evidently let down the US President by not cutting interest rates as much or signalling that more were along the way.

So, following the Chinese' response, threatening to tax US agri-product imports and fixing the Yuan above 6.90, we are left with the global growth fear dynamic again and massive uncertainty with respect to the US and Chinese relations. What that means is both the RBA and RBNZ are going to remain explicitly dovish, and its a race to the bottom. The RBA held off from a rate cut too soon yesterday, but the feelings are that the RBNZ is a sure bet for the day ahead. 

"The RBNZ Monetary Policy Statement is fully priced for a cut in the cash rate 25bp to 1.25%, likely accompanied by a signal of more to come (12pm Syd/10am Sing/HK)," analysts at Westpac said. "The key to any market reaction will be the strength of its guidance about further easing."

Westpac scenarios:

Market neutral:

• Forecasts will show the OCR dropping to 1.1% .
• A 70% chance we think.
• NZD/USD +30 pips.

Our dovish scenario:

• A 25% chance.
• Cut, and an OCR forecast lowered to 1.0%.
• NZD/USD would fall 1c.

Our hawkish scenario:

• A 5% chance.
• Cut and an OCR forecast indicating no further easing.
• NZD/USD would rise 1.3c.

We also have the Australia June housing finance survey which is expected to show the number of owner-occupier approvals up about 1.0%, in the first full month after an election where tax breaks for investment property were a hot topic - as noted by analysts at Westpac. Speaking of which, in yesterday's RBA statement, the housing sector, the statement noted two reasons to be more optimistic which were the passage of the government's tax cuts and the second were the "signs of a turnaround" in the housing market.

AUD/NZD levels

AUD/NZD is moving the to the downside regardless that the RBA is on hold and the RBNZ is tipped to be continuously cutting rates for the foreseeable future. The 1.0007 level is the downside target on the wide. On the upside, 1.0430s.