19 Jul 2013
Flash: PBoC and NZD – Societe Generale
FXstreet.com (Barcelona) - Sebastien Galy in research for Societe Generale highlights the Decision by PboC and the reaction in the NZD.
Key Quotes:
“The Decision by PboC to liberalize the lending rate completely has no direct economic impact except its positive message of reform (deposit rate is next according to our economist Wei Yao)”.
“It is supporting a break higher in NZD/USD. AUD/NZD still meandering lower as NZD reacts far more”.
“NZD Bears have pressured short term rates so high in NZ, the RBNZ has been quite active spreading the pressure”.
“As NZD moves higher the need for this position disappears (risk reversals adjust see rapid moves in nzdusd25delta front ends)”.
“The FX bearish position was probably a hedge for existing Fixed Income flatterners, now starting to outperform courtesy of Bernanke's "dovish" stance and easing activity by the RBNZ”.
Key Quotes:
“The Decision by PboC to liberalize the lending rate completely has no direct economic impact except its positive message of reform (deposit rate is next according to our economist Wei Yao)”.
“It is supporting a break higher in NZD/USD. AUD/NZD still meandering lower as NZD reacts far more”.
“NZD Bears have pressured short term rates so high in NZ, the RBNZ has been quite active spreading the pressure”.
“As NZD moves higher the need for this position disappears (risk reversals adjust see rapid moves in nzdusd25delta front ends)”.
“The FX bearish position was probably a hedge for existing Fixed Income flatterners, now starting to outperform courtesy of Bernanke's "dovish" stance and easing activity by the RBNZ”.