NZD/USD: expected to remain firm – Westpac

By FXStreet FXStreet (Guatemala) – Imre Speizer, analyst at Westpac noted that the RBNZ’s Monetary Policy Statement this morning cut the OCR by 25bp to 2.50%, but gave mixed messages about any further easing (the press release said more easing is possible, the detail said they are firmly on hold). We interpret this as slightly hawkish for the market, and the market has reacted so…NZD/USD up around 1/2c.

Key Quotes:

“The policy guidance paragraph in the press release read: “Monetary policy needs to be accommodative to help ensure that future average inflation settles near the middle of the target range. We expect to achieve this at current interest rate settings, although the Bank will reduce rates if circumstances warrant. We will continue to watch closely the emerging flow of economic data.”.

However, the 90 day track was unchanged, and the detail in Statement confirmed the RBNZ expects to remain at 2.5%.

The warning about the overvalued NZD exchange rate was re-introduced (after an omission in October): “The New Zealand dollar has risen since August, partly reversing the depreciation that occurred from April. The rise in the exchange rate is unhelpful and further depreciation would be appropriate in order to support sustainable growth.”

Market reactions …read more

Source:: FX Street