NZD/USD received a large shot in the arm from the RBNZ - Westpac

Imre Speizer, Research Analyst at Westpac, notes that the NZD/USD received a large shot in the arm from the RBNZ’s on-hold decision yesterday, leading some in the market to speculate the easing cycle may be over.

Key Quotes

“Market pricing for August implies only a 36% chance of a cut then, compared to over 60% just before the announcement. And the chance of one more cut at any meeting over the next two years is 88%.

Combined with the US dollar’s newfound weakness, the above argues for further NZD/USD strength during the weeks ahead. We target 0.7200+. Multi-month, though, if the Fed hikes in September as we expect, then NZD/USD should succumb to a declining interest rate advantage, and fall back into the 0.60s.”