Economists at Westpac are neutral for the week ahead on the NZD/USD pair but note a glimmer of downside risk. The NZ event calendar next week contains two highly important items for markets: the RBNZ MPR meeting (14 July) and Q2 CPI data (16 July) which indicate volatility in store.
Surge in staff turnover suggests movement for higher wages
“NZD/USD looks neutral at present, with just a glimmer of downside risk. We require a break below 0.6925 to increase our conviction in a multi-week bearish outlook.”
“We expect the RBNZ to implicitly endorse market pricing, in which case the NZD would rally slightly. However, a dovish or hawkish surprise have equal likelihood. The former could take the form of only a moderate shift in guidance (retaining the previous guidance language is extremely unlikely given developments). Signalling imminent tightening would be a hawkish surprise.”
“Q2 CPI will be the first of the ‘spike’ quarters and tell us something about its sustainability. The NZIER survey this week gave us some clues that wage inflation could be perky.”
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