RBNZ remain too optimistic – Nordea Markets

Sandeep Kanihama FXStreet Contributor

In view of analysts at Nordea Markets, for NZD, last week wasn’t exactly the best of timings for a short position and it gained as RBNZ did little to converge towards the relatively dovish market expectations.

Key Quotes

“A bit like the Riksbank, RBNZ steadily keeps a too optimistic set of forecasts alive, even as leading indicators have worsened. RBNZ projects i) A lower unemployment rate towards 4.1% ii) a pick-up in GDP growth towards 3%, iii) a pick-up in non-tradables inflation towards 3%.”

“Recent signs from the business survey on wage growth rather point to a deceleration than an acceleration of wage growth. So, if the wage growth didn’t show up in an accelerating non-tradeables inflation during 2018, when businesses highlighted that risk, why should it show up during 2019, now that businesses have started to down tone the risk? The Philips-curve apologists within RBNZ need to answer that.”

“We remain sceptical on the RBNZ assumptions, in particular as leading indicators on unemployment point to a larger risk of higher unemployment than the opposite.”

“We stay long EUR/NZD.”

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.

EUR/USD flirts with daily highs, retargets 1.1900

EUR/USD regains upside traction, returning to the 1.1880 zone and refocusing its attention to the key 1.1900 barrier. The pair’s slight gains comes against the backdrop of a humble decline in the US Dollar as investors continue to assess the latest US CPI readings and the potential Fed’s rate path.

GBP/USD remains well bid around 1.3650

GBP/USD maintains its upside momentum in place, hovering around daily highs near 1.3650 and setting aside part of the recent three-day drop. Cable’s improved sentiment comes on the back of the Greenback’s irresolute price action, while recent hawkish comments from the BoE’s Pill also collaborate with the uptick.

Gold clings to gains just above $5,000/oz

Gold is reclaiming part of the ground lost on Wednesday’s marked decline, as bargain-hunters keep piling up and lifting prices past the key $5,000 per troy ounce. The precious metal’s move higher is also underpinned by the slight pullback in the US Dollar and declining US Treasury yields across the curve.

Crypto Today: Bitcoin, Ethereum, XRP in choppy price action, weighed down by falling institutional interest

Bitcoin's upside remains largely constrained amid weak technicals and declining institutional interest. Ethereum trades sideways above $1,900 support with the upside capped below $2,000 amid ETF outflows.

Week ahead – Data blitz, Fed Minutes and RBNZ decision in the spotlight

US GDP and PCE inflation are main highlights, plus the Fed minutes. UK and Japan have busy calendars too with focus on CPI. Flash PMIs for February will also be doing the rounds. RBNZ meets, is unlikely to follow RBA’s hawkish path.

Ripple Price Forecast: XRP potential bottom could be in sight

Ripple edges up above the intraday low of $1.35 at the time of writing on Friday amid mixed price actions across the crypto market. The remittance token failed to hold support at $1.40 the previous day, reflecting risk-off sentiment amid a decline in retail and institutional sentiment.