NZD/USD has the 0.7465 February high in its sights after the RBNZ's hawkish decision – Westpac
|NZD/USD stands out with a leap of over 1% after the Reserve Bank of New Zealand left its interest rate unchanged and implied a rate hike is on the agenda, perhaps even for later this year. The kiwi is set to target the 0.7465 February high on a break above 0.7315, as reported by Westpac.
RBNZ’s forecast to tightening cycle is steeper than markets implied
“The RBNZ MPS left its policy settings unchanged, as was widely expected, but it did deliver a major hawkish surprise to markets by signalling rate hikes from mid-2022. This was delivered via an OCR forecast showing 150bps of tightening between Q3 2022 and Q3 2024”.
“Markets, which had already priced in rate hikes from mid-2022, were surprised by the re-introduction of the conventional OCR forecast (it had been replaced by the unconstrained OCR forecast after the introduction of its various QE programmes), and by the forecast pace of tightening. That pace was faster than markets had priced in yesterday, and remains so, even after today’s market response.”
“A sustained break above 0.7315 would then target the February high of 0.7465 during the weeks ahead.”
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