Load down on the bearish NZD – Westpac

By FXStreet FXStreet (Guatemala) – Analysts at Westpac explained the key developments for the New Zealand dollar.

Key Quotes:

“Fonterra has downgraded its farm gate milk price forecast for the current season from NZ$4.60/kg to NZ$4.15.

“This is in line with our own forecast of 4.20. Fonterra’s payout has come under pressure as international dairy prices failed to rise as much as anticipated in recent GlobalDairyTrade auctions. This news will come as a disappointment to farmers.that the NZD/USD started to weaken from around 0.6520 on this news and then tumbled from 0.6485 to a low of 0.6418 on the RBNZ statement.”

“The RBNZ held steady as expected but signalled that it may reduce the OCR below 2.5% over the coming year.”

“The key policy guidance paragraph of today’s OCR Review acknowledged that inflation had turned out lower than expected, and that the OCR may need to fall over the year ahead.”

“Westpac’s long-standing view is for a further 50bp in easing but it is a close call whether the RBNZ cuts in March or June. Markets now place a 45% probability on a March cut.”

“AUD/NZD rallied from 1.0830 late NY to 1.0920 and should continue its up trend multi-day/week, to at least 1.10-1.11.”
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Source:: FX Street