AUDNZD Trade Part 3: Binary Outcomes

A big week for all AUD and NZD traders next week, especially if you trade the pair. Both Central Banks hold their meetings with a cut expected from both in either the next meeting or at the very latest, by July.

A cut is being priced in for Australia:

While no change is expected for NZ at the next meeting:

If either one cuts and the other doesn't, i think we'll see a 300 pip move in the favor of the one that doesn't cut. If both cut then we'll probably have some volatility and end up flat. Similar reaction is to be expected if both don't cut.

Personally, i'd be surprised if the Australian Central Bank cuts at this meeting, given how close it is to the elections. If anything, the next meeting seems more likely. I don't think monetary policy is what ails the antipodean currencies but it seems like their central bankers are intent on 'doing something'.