RBNZ: Inflation expectations ease modestly, look for 50bp hike next week – Goldman Sachs

Dhwani Mehta FXStreet

Analysts at Goldman Sachs note that they stick to their call of a 50 bps rate hike by the Reserve Bank of New Zealand next week, despite a modest easing in the Q3 inflation expectations.

Key quotes

“The RBNZ's survey of inflation expectations for Q322 showed a modest easing in expectations at both the 2-year (-20bp to 3.1%) and 5-year (-10bp to 2.3%) ahead horizons, although near-term expectations remain elevated in level terms.”

“Looking through the volatility, we note that medium- to long-run expectations remain well-anchored around the midpoint of the RBNZ's 1-3% target band, which should provide the RBNZ some relief given concerns around an unanchoring of inflation expectations given high spot inflation.”

We continue to expect the RBNZ to hike by 50bp to 3% at the August meeting."

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

EUR/USD flirts with weekly lows near 1.1770

EUR/USD now comes under further selling pressure, breaking below the 1.1800 support to challenge the area of weekly throughs near 1.1770 on Thursday. The pair’s decline comes in response to marked gains in the US Dollar amid steady geopolitical tensions. Ealier in the day, the ECB’s Lagarde delivered cautious remarks, although the currency remained apathetic.

GBP/USD threatens the 200-day SMA near 1.3440

GBP/USD rapidly leaves behind Wednesday’s strong advance, coming under heavy pressure and retesting the 1.3440 zone, where the critical 200-day SMA is located. Cable’s deep pullback follows the strong gains in the Greenback, while investors continue to pencil in a potential BoE rate cut in March.

Gold trims gains, slips back to around $5,170

Gold is now facing some downside pressure, hovering around the $5,170 region on Thursday. The yellow metal surrenders part of its earlier gains on the back of the resurgence of the buying interest in the Greenback. In the meantime, geopolitical tensions in the Middle East continue to limit the downside potential for now.