“Since the OCR cut in early August, NZD/USD has fallen to multi-year lows of 0.6269, pushed down by expectations of further rate cuts down the road. Business investment in the region remains lackluster, with the confidence index dropping to the lowest level since April, reflecting global trade tensions. Retail sales have also underperformed due to lower fuel sales. Consumer confidence improved in August to 118.2, but remains below the 120 historical average as declining house prices weigh on sentiment. We do not see these themes changing over the coming months, and as such, there’s less scope for an extension higher in NZD driven by improving fundamentals.”
“The 50bps cut in August was far more aggressive than the market expected and was done to ward off the need for additional aggressiveness down the road. We do not see the RBNZ making further moves this year and near term moves in the NZD will be driven by macro gyrations.”
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