RBNZ: NZD depreciation is needed – SocGen

Sandeep Kanihama FXStreet Contributor

Kit Juckes, Research Analyst at Societe Generale, notes that the RBNZ left the Official Cash rate at 1.75%, and issued a statement that expressed a view that further NZD depreciation is needed, while simultaneously saying that inflation is expected to return to its 2% target over the medium term.

Key Quotes

“That could be read as either bullish or dovish but the rates market has reacted by increasing the implied probability of hike in rate this year to almost 50%, and fully discounting a move by this time next year. AUD/NZD longs have been squeezed and the AUD has drifted lower. We think AUD/NZD is on track for a longer-term move towards 1.20 and if this correction gets significantly below 1.08, we will be buyers.”

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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