BofA recommends selling AUD/NZD on policy divergence outlook

Bank of America reiterated a bearish view on AUD/NZD, recommending selling the pair on expectations of policy divergence between the Reserve Bank of Australia and the Reserve Bank of New Zealand. BofA expects the RBA to keep rates unchanged until the second half of 2027, while the RBNZ is forecast to raise rates twice more in 2026. The bank also sees structural migration dynamics and widening tax-rate differentials as additional headwinds for AUD/NZD. The view is further reinforced by Australia’s sensitivity to agricultural commodity prices, which BofA says does not offset the negative policy and migration backdrop. The article suggests downside pressure on the Australian dollar versus the New Zealand dollar, with the pair already trading around 1.2085 and up 0.38% intraday at the time of publication.