22 Jul 2015
NZD/USD: RBNZ preview, 25 or 50 bps?
FXStreet (Guatemala) - ="">NZD/USD is currently trading at 0.6582 with a high of 0.6645 and a low of 0.6559.
NZD/USD has been in a minor recovery of the downside that came of the dollar's come back from the heights of the rally at the start of the week until the mid point of the 0.66 handle of over 130 pips. The bird is in highly bearish territory while the dovish RBNZ and poor economy weighs on the currency. We have the interest rate decision arriving shortly on the hour that will be accompanied by the statement.
Markets are looking for a rate cut from the Bank and some market participants are calling for as much as 50 bps, but 25bps is more of a common consensus due to the soft bird and taking in to account the costs of imports and prospect of higher inflation along with recessionary headwinds, while consensus would be leaving the door open for further easing in September and December instead while the economy seems as though it needs it. The statement is going to be a key in-put to the markets reaction either way and subsequent price action.
Analysts at Westpac say that they are still short from NZD/USD from 0.7225 and that the multi-month downtrend continues, and they remain bearish, targeting 0.6400 this week. "The only obvious argument for a near term bounce is positioning – CFTC reports show NZD/USD futures speculative positioning is at a record low, warning of a sharp short-squeeze eventually. Indeed, if the RBNZ cut by 25bp on Thursday but did not explicitly signal further rate cuts, a multi-cent bounce could ensue. We expect a 25bp cut to 3.00%, accompanied by strong guidance, but there is a decent (40%, say) chance of a 50bp move. The former should push the NZD slightly lower but the latter would see a 1-2 cent fall."
NZD/USD has been in a minor recovery of the downside that came of the dollar's come back from the heights of the rally at the start of the week until the mid point of the 0.66 handle of over 130 pips. The bird is in highly bearish territory while the dovish RBNZ and poor economy weighs on the currency. We have the interest rate decision arriving shortly on the hour that will be accompanied by the statement.
Markets are looking for a rate cut from the Bank and some market participants are calling for as much as 50 bps, but 25bps is more of a common consensus due to the soft bird and taking in to account the costs of imports and prospect of higher inflation along with recessionary headwinds, while consensus would be leaving the door open for further easing in September and December instead while the economy seems as though it needs it. The statement is going to be a key in-put to the markets reaction either way and subsequent price action.
Analysts at Westpac say that they are still short from NZD/USD from 0.7225 and that the multi-month downtrend continues, and they remain bearish, targeting 0.6400 this week. "The only obvious argument for a near term bounce is positioning – CFTC reports show NZD/USD futures speculative positioning is at a record low, warning of a sharp short-squeeze eventually. Indeed, if the RBNZ cut by 25bp on Thursday but did not explicitly signal further rate cuts, a multi-cent bounce could ensue. We expect a 25bp cut to 3.00%, accompanied by strong guidance, but there is a decent (40%, say) chance of a 50bp move. The former should push the NZD slightly lower but the latter would see a 1-2 cent fall."