AUD/NZD holds close to highs last seen in April 2013

The AUD/NZD currency pair held in proximity to a 13-year high of 1.2234 on Monday ahead of the outcome of the Reserve Bank of Australia’s policy meeting.

The Reserve Bank of Australia is expected to raise its cash rate by 25 basis points to 4.35% at its May 5th meeting. It would be the RBA’s third consecutive 25 bps rate hike this year.

The RBA had underscored that inflation was still expected to stay above target for an extended period and that the balance of risks shifted further toward the upside, including for inflation expectations.

The latest data by the Australian Bureau of Statistics showed that annual consumer price inflation in Australia had picked up to 4.6% in March from 3.7% in February. The move was largely attributed to a fuel shock linked to the Middle East conflict.

On a monthly basis, the CPI rose 1.1% in March, compared with 0% in the prior month.

Elevated inflation along with a tight labor market and stronger-than-expected growth in late 2025 have underpinned expectations that the RBA may tighten policy further.

Also, trading sentiment is still closely tied to evolving developments in the Middle East. US President Donald Trump stated over the weekend that the United States would begin escorting neutral vessels that are stuck in the Strait of Hormuz under an operation named Project Freedom, noting that “if this process is disrupted, we will deal with it by force.”

In response, Ebrahim Azizi, head of the Iranian parliament’s National Security Commission, issued a formal warning that any US involvement in the key shipping route would amount to a ceasefire breach.

At the same time, expectations that the Reserve Bank of New Zealand will retain a cautious bias or potentially tighten policy to steer inflation back toward the 2% midpoint kept the New Zealand Dollar supported.

The AUD/NZD currency pair was last down 0.15% on the day to trade at 1.2199.