RBNZ To Deliver On Expectations?
Despite very prior gloomy forecasts from the RBNZ as well as the NZ Treasury, recent data from New Zealand has come out better-than-expected. Now I do agree that can be said for most developed economies. However, recent data does give the bank reason to feel less bleak, but underlying risks are still titled to the downside.
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It’s time for another RBNZ meeting this week, and so far the markets are not expecting too much in the way of volatility from the event. However, the bank, under leadership of Governor Orr, has arguably taken a more pro-active lead regarding policy actions.
Thus, even though expectations for the bank are to take this meeting as a breather, we might be in store for some currency jawboning or some potential changes to the bond buying program.
Most investment banks would agree that the RBNZ will most likely have to increase their current bond buying cap of NZ$60 to about NZ$90. According to ANZ investment bank, there is some reason to believe the bank might announce it at this meeting.
Even though that is not consensus view, such a move might be enough to show the market the bank’s steadfastness to their ultra-loose policy stance, and might see the NZD lose some of its recent shine, which the RBNZ has mentioned as a concern.
So, all in all, there is some scope for the RBNZ to stick to market expectations and just deliver some jawboning, but maybe they take advantage of the low expectations and act more pro-actively.
This week’s video will help you prepare for the upcoming events and provide insights into how you could possibly trade them as well.
Highlights of the video:
00:45 – Current Baseline
03:07 – Baseline expectations for the upcoming risk event
05:05 – Possible sentiment shifts
07:13 – Possible currency pairs to consider
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