13 Jun 2014
NZD supported on carry - RBS
FXStreet (Guatemala) - Analysts at RBS noted, against their expectations, the RBNZ hiked the OCR and gave no indication that they were willing to slow the pace of hikes despite falling dairy prices and a still-strong NZD.
Key Quotes:
“Deputy Governor McDermott noted recently that the RBNZ expects to hike the OCR a further 50bp this year (or two 25bp hikes in their next four meetings). Looking ahead, while the RBNZ removed more direct comments on the FX rate in the June press-release, both Wheeler and McDermott gave clear signals that they expected the currency to decline with commodity prices”.
“By hiking amid a record strong currency, the RBNZ has shown a tolerance of the high NZD rate, but appears less tolerant of a rise that they feel is out of line with fundamentals. On May 7th Governor Wheeler noted it would become "more opportune" to intervene in FX markets should the NZD continue to rise while commodity prices continue to fall”.
“The global demand for carry and strong growth numbers are fundamental supports for NZD in their own right. First quarter GDP growth is released next week”.
Key Quotes:
“Deputy Governor McDermott noted recently that the RBNZ expects to hike the OCR a further 50bp this year (or two 25bp hikes in their next four meetings). Looking ahead, while the RBNZ removed more direct comments on the FX rate in the June press-release, both Wheeler and McDermott gave clear signals that they expected the currency to decline with commodity prices”.
“By hiking amid a record strong currency, the RBNZ has shown a tolerance of the high NZD rate, but appears less tolerant of a rise that they feel is out of line with fundamentals. On May 7th Governor Wheeler noted it would become "more opportune" to intervene in FX markets should the NZD continue to rise while commodity prices continue to fall”.
“The global demand for carry and strong growth numbers are fundamental supports for NZD in their own right. First quarter GDP growth is released next week”.