RBNZ Preview: Dovish stance to down the kiwi
|The Reserve Bank of New Zealand (RBNZ) is expected to leave policy steady at its September meeting. Dovish forward guidance could weigh on the kiwi but dollar’s mood is set to dominate, FXStreet’s Dhwani Mehta reports.
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Key quotes
“With the coronavirus restrictions lifted for most of New Zealand (NZ), lower unemployment rate forecast and less-severe-than expected economic slump, the Reserve Bank of New Zealand (RBNZ) is expected to keep the Official Cash Rate (OCR) unchanged at a record low of 0.25% for the fourth straight month in September.”
“The strong fundamentals could prompt the RBNZ to stand pat on its monetary policy settings on Wednesday but Governor Adrian Orr and company could reinforce the dovish stance amid looming concerns over the longer-term economic impact of the coronavirus pandemic.”
“Any hints on the adoption of the negative interest rates as a policy option and/or verbal intervention could exacerbate the pain in NZD/USD.”
“The risk tone and the resultant sentiment around the US dollar could likely influence the NZD/USD reaction to the RBNZ's decision. Although the bias appears to the downside amid an expected dovish forward guidance.”
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