Since both the New Zealand dollar (NZD) and Australian dollar (AUD) have links to commodities, they have historically been viewed as “risky” currencies that tend to rise when growth prospects are strong and vice versa, said Jane Foley, FX analyst at Rabobank.
Commodity exports mitigate downside risks for the Australian and New Zealand dollars
“An evolving and complex geopolitical backdrop has the potential to skew this relationship. In addition to its gold exports, Australia is a growing exporter of rare earth elements, and both countries stand to benefit from solid food exports in 2025 – the latter likely to be subject to more inelastic demand for other commodities (depending on geopolitics).”
“However, the broader global growth environment is likely to remain weighing on both currencies. Currently, we see a risk that the RBA and RBNZ will back off on interest rate hike speculation. The RBA’s next policy meeting is scheduled for February 3, and a less hawkish than expected message could also create headwinds for the NZD as well as the AUD.”
“The next RBNZ meeting is scheduled for February 18. Therefore, we see room for declines in both AUD/USD and NZD/USD in the coming weeks. However, we view a return to AUD/USD0.66 and NZD/USD0.57 as buying opportunities and look forward to both currency pairs rising mid-year.”
