7 May 2015
NZD/USD still bearish, points to 0.68 end of 2015 – BAML
FXStreet (Edinburgh) - Yang Chen, Analyst at BAML sees the pair grinding lower towards the 0.68 region by year-end.
Key Quotes
“The April RBNZ policy meeting left the OCR rate on hold, but managed to send a signal to the market that the balance of risk is skewed towards OCR cuts”.
“The dovish tilt should give the RBNZ more credibility if it wants a lower currency. The RBNZ continues to view the currency as "unjustifiably high and unsustainable" and added that "the appreciation in the exchange rate while the key export prices have been falling is unwelcome".
“While the RBNZ remains data dependent, the dovish tilt allows them to act should the current low inflation pass on to the inflation expectations”.
“The OIS curve suggests that the market is pricing about 15% chance of rate cut in the upcoming OCR review on 11 June and a full rate cut by the December policy meeting”.
“A dovish RBNZ and solid US growth as the bad weather behind us should keep the NZD/USD downside intact. We retain our forecast for the NZD/USD at 0.68 by the end of the year”.
Key Quotes
“The April RBNZ policy meeting left the OCR rate on hold, but managed to send a signal to the market that the balance of risk is skewed towards OCR cuts”.
“The dovish tilt should give the RBNZ more credibility if it wants a lower currency. The RBNZ continues to view the currency as "unjustifiably high and unsustainable" and added that "the appreciation in the exchange rate while the key export prices have been falling is unwelcome".
“While the RBNZ remains data dependent, the dovish tilt allows them to act should the current low inflation pass on to the inflation expectations”.
“The OIS curve suggests that the market is pricing about 15% chance of rate cut in the upcoming OCR review on 11 June and a full rate cut by the December policy meeting”.
“A dovish RBNZ and solid US growth as the bad weather behind us should keep the NZD/USD downside intact. We retain our forecast for the NZD/USD at 0.68 by the end of the year”.