23 Jul 2014
NZD to face some headwinds - TD Securities
FXStreet (Łódź) - The TD Securities FX research team suggest that if the RBNZ hints at taking a pause in the tightening cycle tonight, NZD will come under pressure against most majors.
Key quotes
"A soft inflation report and a sharp decline in dairy prices last week have prompted many in the market to ponder the odds of a pause in the RBNZ tightening cycle after the widely expected increase in the overnight cash rate to be delivered this evening."
"Our Singapore colleagues have been signaling this pause for a while. Moreover, they expect the RBNZ to resume its hiking cycle in December, with an additional 25bps increase for a year-end OCR target of 3.75%."
"This would leave the central bank only 75bps away from its new, lower, neutral rate of 4.5%, which is 200bps lower than the pre-global financial crisis neutral rate."
"Although lower than the highest levels YTD seen in May, net NZD longs remain substantial, and with most of the RBNZ tightening for this year already priced in, NZD will come under pressure against most majors, were the central to signal tonight it will take a breather in the coming months."
Key quotes
"A soft inflation report and a sharp decline in dairy prices last week have prompted many in the market to ponder the odds of a pause in the RBNZ tightening cycle after the widely expected increase in the overnight cash rate to be delivered this evening."
"Our Singapore colleagues have been signaling this pause for a while. Moreover, they expect the RBNZ to resume its hiking cycle in December, with an additional 25bps increase for a year-end OCR target of 3.75%."
"This would leave the central bank only 75bps away from its new, lower, neutral rate of 4.5%, which is 200bps lower than the pre-global financial crisis neutral rate."
"Although lower than the highest levels YTD seen in May, net NZD longs remain substantial, and with most of the RBNZ tightening for this year already priced in, NZD will come under pressure against most majors, were the central to signal tonight it will take a breather in the coming months."