Arnaud Masset
Swissquote Bank Ltd
The New Zealand dollar already started the week on the back foot on the heel of a disappointing second quarter’s inflation figures. It was only the beginning. On Thursday, the Kiwi took another hit but from the central bank this time. Following its monetary policy meeting, the Reserve Bank of New Zealand decided unsurprisingly to hold the official cash rate at 1.75%. However, the monetary institution made a dramatic shift in its language as it made clear it is not happy, at all, with the current strength of the Kiwi.
Assistant Governor McDermott suggested for a second that the bank could move back to intervention should the circumstances require so. However, he added as he tried to allay an overreaction of markets that it was just a little nudge, rather than “a slap across the face”.
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NZD/USD was off 0.70% after the release of the statement and the press conference of Governor Wheeler. McDermott’s comments were the final in the coffin, sending the local dollar down another 0.60% to 0.7267. We maintain our bearish view on the pair with the 0.72 level as next target in the short-term.
This report has been prepared by Swissquote Bank Ltd and is solely been published for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any currency or any other financial instrument. Views expressed in this report may be subject to change without prior notice and may differ or be contrary to opinions expressed by Swissquote Bank Ltd personnel at any given time. Swissquote Bank Ltd is under no obligation to update or keep current the information herein, the report should not be regarded by recipients as a substitute for the exercise of their own judgment.
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