NZD/USD: RBNZ hike may help the kiwi – ING

The Reserve Bank of New Zealand (RBNZ) is widely expected to hike rates at its October 6 meeting. Economists at ING believe this outcome would boost the kiwi but NZD is vulnerable to woes on broader sentiment.

No more excuses for the RBNZ

“Since leaving rates on hold at the August meeting, comments by RBNZ officials have strongly suggested we’ll see a 25bp rate hike this week. In August, a lockdown announcement in New Zealand kept policymakers from pulling the trigger on tightening, now there appears to be no more ‘excuses’ to delay the first hike.” 

“Markets are currently pricing in around 80% probability of a hike, and if the RBNZ delivers as we expect, we could see some moderate support for NZD.”

“Any positive impact on NZD from the RBNZ meeting may be, however, offset by an unsupportive risk environment: here, unlike AUD, NZD cannot count on domestic commodity exports to ease any selling pressure.”