FXstreet.com (Barcelona) - A bit of hawkish sentiment from RBNZ Deputy Governor Spencer on the NZ housing market recently produced a brief flurry of excitement in local markets. The NZ swap yields nudged higher into the close (2-year yield from 2.83% to 2.87%), helping to set the NZD/AUD on a path higher. According to the BNZ Research Team, “At around 0.8130, the cross is now creeping into the top end of our model’s 0.7950-0.8150 short-term ‘fair-value’ range.”

Spencer’s speech made it clear the RBNZ is paying closer attention to the housing market, from both a monetary policy and financial system perspective. “If the housing market momentum continues and adds inflationary pressures, a monetary response would become more likely. Macro-prudential tools…are not as powerful as monetary policy.” It doesn’t get much clearer than that.