The RBNZ meet next week at 0300 UK time on Wednesday July 13. The outlook for the RBNZ has been robust and from last November they took the most aggressive stance towards hiking rates with a terminal rate pushing up to nearly 4%. You can read about their last rate meeting here.

Don’t just look at the rate decision

Short term interest rate markets are pricing in a 100% chance of a 50 bps rate hike and a 67% chance of a 75 bps rate hike. So, 50 bps is expected and a 75 bps hike will be a slightly bullish surprise. However, rate hikes most likely won’t be the focus on Wednesday as it will all be about the future path of rates for the RBNZ.

Reason for caution

The Bank of New Zealand’s recently projected that New Zealand could enter into a recession in 2023. This was after a poor business opinion print. The BNZ’s head of research warned that the latest ANZ Bank’s survey of business opinion was ‘littered with indicators that fit with our view that the economy is headed into recession’. Although short term Interest Rate Markets are projecting that the RBNZ will hike to 4% by the end of the year from the current rate of 2.00%, and BNZ project that the rate will only reach to 3.5%.

What’s the possible AUD/NZD trade?

The trade is to buy AUDNZD if we see a less hawkish RBNZ. This is because markets are already pricing in a lot of interest rate hikes. Notice this symmetrical triangle feature on the daily chart.

Chart

If BNZ’s research is correct, and the RBNZ confirm their findings, then the AUDNZD should drift lower. If you are unsure of how to interpret the decision, take a look at the bond yield spread between the AU10Y and the NZ10Y as that will give you bond traders view.

Chart


Learn more about HYCM

High-Risk Investment Warning: Contracts for Difference (‘CFDs’) are complex financial products that are traded on margin. Trading CFDs carries a high degree of risk. It is possible to lose all your capital. These products may not be suitable for everyone and you should ensure that you understand the risks involved. Seek independent expert advice if necessary and speculate only with funds that you can afford to lose. Please think carefully whether such trading suits you, taking into consideration all the relevant circumstances as well as your personal resources. We do not recommend clients posting their entire account balance to meet margin requirements. Clients can minimise their level of exposure by requesting a change in leverage limit. For more information please refer to HYCM’s Risk Disclosure. *Any opinions made in this material are personal to the author and do not reflect the opinions of HYCM. This material is considered a marketing communication and should not be construed as containing investment advice or an investment recommendation, or an offer of or solicitation for any transactions in financial instruments. Past performance is not a guarantee of or prediction of future performance. HYCM does not take into account your personal investment objectives or financial situation. HYCM makes no representation and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast, or other information supplied by an employee of HYCM, a third party, or otherwise. Without the approval of HYCM, reproduction or redistribution of this information isn’t permitted.

Feed news Join Telegram

Recommended Content


Recommended Content

Editors’ Picks

EUR/USD falls below 1.0500 after US NFP data

EUR/USD falls below 1.0500 after US NFP data

EUR/USD dropped below 1.0450 but managed to stage a modest rebound. The US Dollar preserves its strength against its rivals and doesn't allow the pair to gain traction after the data from the US showed that Nonfarm Payrolls rose by 263,000 in November.

EUR/USD News

GBP/USD turns south on upbeat US jobs report, trades below 1.2200

GBP/USD turns south on upbeat US jobs report, trades below 1.2200

GBP/USD lost nearly 100 pips with the immediate reaction to the upbeat November jobs report from the US and broke below 1.2200. The US Dollar Index clings to strong daily gains above 105.00 after the data showed that Nonfarm Payrolls rose by 263,000.

GBPUSD News

Gold retreats below $1,790 as US yields surge on US NFP

Gold retreats below $1,790 as US yields surge on US NFP

Gold price turned south and dropped below $1,790 in the early American session. The benchmark 10-year US Treasury bond yield is up more than 2% on the day near 3.6% after the bigger-than-expected November job growth, weighing heavily on XAU/USD.

Gold News

FTX exchange collapse, loss of $3.1 billion could have been avoided on one condition

FTX exchange collapse, loss of $3.1 billion could have been avoided on one condition

FTX exchange, founded by Samuel Bankman-Fried (SBF), has consistently made headlines over the past month for its liquidity crisis and triggering a collapse in the crypto ecosystem.

Read more

AMC advances more than 3% in premarket day after being halted

AMC advances more than 3% in premarket day after being halted

AMC stock is up 3.4% in Friday's premarket just a day after authorities halted trading due to unusual volatility. Thursday saw options volume three times higher than the 20-day average.

Read more

Majors

Cryptocurrencies

Signatures