27 Apr 2015
NZD/USD softness could be temporary – JP Morgan
FXStreet (Edinburgh) - Analysts at JP Morgan expect the current weakness around the pair to be only temporary.
Key Quotes
“NZD was the worst performing major currency as investors took a speech by assistant governor McDermott rise as a nod in the direction of an easing bias from the RBNZ”.
“Our economist believes this is an overreaction and that while McDermott was setting out the scenario in which rates could be cut – a persistent slide in inflation expectations, in part due to currency-induced weakness in tradeables – none of this was new information, nor necessarily suggestive that the RBNZ will adopt a formal bias to ease”.
“We expect the RBNZ to maintain a neutral bias at next week’s policy meeting, which should allow NZD/USD to catch-up with the weaker overall USD index, especially as the bill curve fully prices a 25bp rate cut by early next year”.
Key Quotes
“NZD was the worst performing major currency as investors took a speech by assistant governor McDermott rise as a nod in the direction of an easing bias from the RBNZ”.
“Our economist believes this is an overreaction and that while McDermott was setting out the scenario in which rates could be cut – a persistent slide in inflation expectations, in part due to currency-induced weakness in tradeables – none of this was new information, nor necessarily suggestive that the RBNZ will adopt a formal bias to ease”.
“We expect the RBNZ to maintain a neutral bias at next week’s policy meeting, which should allow NZD/USD to catch-up with the weaker overall USD index, especially as the bill curve fully prices a 25bp rate cut by early next year”.