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13 Mar 2013
Forex Flash: RBNZ next risk event; NZD/USD a buy on dips - Rabobank
Ahead of tomorrow's RBNZ monetary policy decision, the consensus seems to be unanimous for the central bank to hold rates steady. However, as Rabobank notes, "with New Zealand currently in pole position to be the first G10 country to suffer a rate hike this cycle, there will be plenty of attention steered towards the policy statement."
A key element of this report will be the outlook on the housing market, Rabobank observes: "Back in December, the RBNZ warned that 'if the housing market continues to gather momentum, there is a risk of a stronger pick-up in household credit and further increase in house price inflation. Such developments would have implications for the appropriate stance of monetary policy..."
Rabobank continues: "That said, the market is expecting a rate hike before the end of the year. Despite the relatively high value of the NZD, in view of investors’ continued demand for yield we expect the NZD to hold its ground vs. the USD this year. We would look to buy NZD/USD on dips and expect a re-test of the year’s high in the NZD/USD 0.8535 on a 3 to 6 mth region."
A key element of this report will be the outlook on the housing market, Rabobank observes: "Back in December, the RBNZ warned that 'if the housing market continues to gather momentum, there is a risk of a stronger pick-up in household credit and further increase in house price inflation. Such developments would have implications for the appropriate stance of monetary policy..."
Rabobank continues: "That said, the market is expecting a rate hike before the end of the year. Despite the relatively high value of the NZD, in view of investors’ continued demand for yield we expect the NZD to hold its ground vs. the USD this year. We would look to buy NZD/USD on dips and expect a re-test of the year’s high in the NZD/USD 0.8535 on a 3 to 6 mth region."