Med-Term Focus For NZD Intact
The NZD had a textbook buy-the-rumour-sell-the-fact reaction to the RBNZ’s 25 basis point rate hike this past week, but has anything really changed for the currency?
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Yes, the NZD flushed lower after the RBNZ’s 25-basis point hike, but that wasn’t too much of a surprise since the markets had already priced in the hike, and since the bar for a hawkish surprise was pretty high going into the event.
The most important take away from the meeting though was that the bank still view their med-term outlook for both inflation and employment unchanged from the August statement. That is significant because that means the rate path projection of 7 hikes between Q4 of this year and H1 2023 remains intact as well.
With the NZD now officially sitting on the highest cash rate among the majors, any further increases in the cash rate should add a lot of carry attractive for the NZD in the months ahead, especially versus the low yielders like the JPY and CHF.
As always, we have more on this and how we look to potentially take advantage of it in our week ahead video.
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If you find these weekly analysis and trade ideas useful, you’ll love Financial Source. There’s a link below where you can learn more about it.
https://financialsource.co
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We interpret and explain price moves in real-time, 24 hours a day. Our team of analysts produce text, video and audio commentary.
You understand the markets and trade with confidence. Learn more at our website here: https://financialsource.co
-----
Yes, the NZD flushed lower after the RBNZ’s 25-basis point hike, but that wasn’t too much of a surprise since the markets had already priced in the hike, and since the bar for a hawkish surprise was pretty high going into the event.
The most important take away from the meeting though was that the bank still view their med-term outlook for both inflation and employment unchanged from the August statement. That is significant because that means the rate path projection of 7 hikes between Q4 of this year and H1 2023 remains intact as well.
With the NZD now officially sitting on the highest cash rate among the majors, any further increases in the cash rate should add a lot of carry attractive for the NZD in the months ahead, especially versus the low yielders like the JPY and CHF.
As always, we have more on this and how we look to potentially take advantage of it in our week ahead video.
-----
If you find these weekly analysis and trade ideas useful, you’ll love Financial Source. There’s a link below where you can learn more about it.
https://financialsource.co
