Reminder: RBA and RBNZ monetary policy decisions due this week

A friendly reminder that central banks are also on the agenda amid the chaos seen in US-China trade relations to start the week

The RBA will be meeting tomorrow and the RBNZ will be meeting on Wednesday to decide on their latest monetary policy decisions. The expectations for both central banks to act and cut rates by 25 bps are very much on the fence right now, so expect some good reaction regardless of what course of action is pursued by either central bank.

Based on OIS market pricing, odds of a rate cut by the RBA currently sit at 44.4%:

Meanwhile, odds of a rate cut by the RBNZ currently sit at 49.1%:

I reckon the RBNZ decision will be a more straightforward one with the kiwi either gaining or falling on the back of how the rate decision plays out. However, for the RBA, I find it a bit tricky to get a read on this one.

Markets have basically gotten a dovish feel of the RBA in recent months but traders could be chasing after a rate cut a bit too soon. In that lieu, a rate cut announcement is likely to see the aussie pressured but some expectation has already been factored in at this point. I reckon the currency could bounce back in the aftermath or later in the week as a cut now will give the RBA some scope to stay on hold for quite a while yet.

On the flip side, if the RBA holds and deliver a dovish tilt again, I reckon the aussie will jump on that decision before coming under pressure again in the near future as domestic data continues to apply pressure on the central bank to finally deliver on a rate cut.

That said, the above scenarios pretty much assume an all else being equal conduct but as we are seeing today, US-China trade talks are going to be a major factor in dictating direction for the aussie and kiwi this week as well.

Here's a bunch of previews for the meetings as provided by Eamonn (and one by Nick as well) since last week: