NZD: Positive 3Q CPI surprise may fuel hawkish RBNZ repricing - ING

Sandeep Kanihama FXStreet Contributor

Analysts at ING note that despite the political vacuum in New Zealand, the kiwi continues on a recovering trend amid a benign bond market environment.

Key Quotes

“While it is expected that a government will be formed this week - although it does it appear that NZ First's leader Winston Peters is taking his time to choose his coalition partner - NZD price action will likely take its cue in the week ahead from the 3Q CPI release (Mon). The consensus is looking for a small pickup to 1.8% YoY, still a tad shy of the 2% midpoint of the RBNZ's target band.”

“Under a National-NZ First coalition, we suspect RBNZ rate hike expectations could nudge forward into the middle next year (relative to the current pricing of a Sep-2018 hike). A positive CPI surprise would support this story. We look for NZD/USD to continue moving higher towards 0.7240 (50% retrace of the recent election-related move lower) - with our target for 0.74 by year-end.”

Author

Sandeep Kanihama

FXStreet Contributor

Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.

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