According to analysts from Rabobank the next meeting of the Reserve Bank of New Zealand (RBNZ) will be crucial. They see the central bank still set to be more hawkish than most of the other G10 central banks. They favor selling rallies in EUR/NZD for a move back to the 1.63 area.
“Today’s surge in the in the value of NZD/USD is testament to the ratchetting up of RBNZ rate hike expectations. After the Norges Bank the RBNZ has been widely considered as one of the most hawkish G10 central banks for some time. However, the shift in market expectations on the back of an overnight data release now suggests that the RBNZ is now widely considered to be well ahead of the BoC in terms of rate hike potential. The official guidance of both of these central banks suggests that rates could be on hold until the second half of 2022, though some commentators are now forecasting a rate hike from the RBNZ as soon as November this year. The RBNZ policy meeting on July 14, will be crucial in terms of policy guidance.”
“Given that both yields and the NZD have already adjusted higher, monetary conditions have already tightened and we see scope for the RBNZ to temper some of the enthusiasm about rate hike potential in the coming weeks. That said, the RBNZ is still set to be more hawkish than most other G10 central banks.”
“Given that we expect the USD to remain on the front foot this summer given the focus on the possibility of Fed tapering, we would favour buying dips in the NZD vs. the EUR. We see scope for a move back to the February low at in the EUR/NZD 1.63 area on a 3 month view.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.