BCB: On Hold As Expected, Contractionary Policy Needed For Long Period

• RES 3: 97.796 - 1.618 proj of the Sep 3 - 12 - 15 price swing
• RES 2: 96.685 - 1.000 proj of the Sep 3 - 12 - 15 price swing 
• RES 1: 96.615 - High Sep 12  
• PRICE: 96.395 @ 16:23 BST Oct 06
• SUP 1: 96.280 - Low May 15 (cont.)  
• SUP 2: 95.900 - Low Jan 14 (cont.)
• SUP 3: 95.760 - Low 14 Nov ‘24

Aussie 3-yr futures have traded lower and the contract has cleared the Sep 3 low of 96.435. A break of this level negates the recent short-term bullish theme. This breach signals scope for an extension towards 96.280, the May 15 low on the continuation chart. The short-term resistance to watch is 96.615, the Sep 12 high. Clearance of this level is required to reinstate a bullish theme.  

The AUD/USD had a range overnight of 0.6590-0.6620, Asia is trading around 0.6615. US stocks continue to shrug off global politics and the US shutdown, the USD though got a boost from the reaction in USD/JPY. The AUD drifted higher, helped by the way risk continues to push higher and probably some AUD/JPY demand as the JPY crosses surged. A move back through the 0.6625/50 area is needed to gain the momentum to have another look toward the pivotal 0.6700 area. 

• Bloomberg - “Australian Rare Earths Stocks Climb on Trump Talks With Firms. A report claimed that US President Donald Trump’s administration was mulling a stake in Critical Minerals Corp., which hopes to develop a project in Greenland. It follows news last week that the Trump government was actively looking at ways to take equity stakes in Australian companies.”
• “Australia, New Zealand to Boost Efforts to Integrate Economies. Australia and New Zealand will fast-track work on a more ambitious Single Economic Market, the program that aims to integrate their economies and reduce barriers for business.” - BBG
• Options : Closest significant option expiries for NY cut, based on DTCC data: 0.6735(AUD350m). Upcoming Close Strikes : 0.6300(AUD899m Oct 8 )- BBG
• Data/Event: Westpac Consumer Conf SA, ANZ-Indeed Job Advertisements MoM

Fig 1: AUD/USD spot 2H Chart

Source: MNI - Market News/Bloomberg Finance L.P

The RBNZ will have a new Financial Policy Committee (FPC) to be in place in early 2026. Its remit will include macro-prudential decisions (Debt-to-income, LTV ratio levels), financial institution’s prudential requirements and decisions related to financial stability. 

• The goal of the new committee is to ensure the stability of NZ’s financial system through stronger decision making by engaging experts in the field.
• The RBNZ Board Chair and Governor will sit on the FPC with another 3 RBNZ Board members and up to 2 non-Board members or RBNZ employees.
• The decision to introduce the FPC was made with the Treasury and Minister of Finance following recommendations from the Finance and Expenditure Committee’s Inquiry into Banking Competition.