NZD/USD may well test 0.60 in the near term – ING

Economists at ING expect a 50 basis points rate hike by the Reserve Bank of New Zealand (RBNZ). In their view, the market reaction will be mostly driven by the RBNZ’s assessment of the economic outlook and forward-looking language. Still, NZD/USD is set to move lower towards 0.60.

RBNZ to hike by 50 bps

“The chances of seeing anything different from another 50 bps rate hike appear quite low. A half-point increase is in line with the latest bank projections as well as consensus and market expectations.”

“A deteriorating economic outlook in New Zealand and signs of a rapidly contracting housing market both argue in favour of some kind of recalibration of the Bank’s hawkishness. It may be too early to deliver a dovish shift this month, but we see rising risks of a revision lower in the rate projections at the August meeting.”

“Expect any impact of monetary policy on NZD/USD to remain very limited, as external factors remain centre stage.” 

“The pair may well test 0.60 in the near term.”