NZDUSD: Don't fight the RBNZ
We eventually got the squeeze back up to 66c in NZDUSD that I was expecting after the RBNZ’s disappointment.
But it actually just came at the whim of the bid tone in EURUSD which, having held 1.17, seems like a trend that one doesn’t want to get in the way of, in the form of USD longs anywhere.
Ironically, the RBNZ shelfing foreign asset purchases and exchange rate targeting as a policy tool in favour of negative interest rates could lead to a more medium term and sustained decline in NZD, at least on a relative value basis.
It looks highly likely that we will see negative interest rates in NZ in the new year, when banks have gotten past the technical constraints.
AUDNZD seems like a good medium term long, with CB policy divergence and a good round of employment data from Australia overnight.
But it actually just came at the whim of the bid tone in EURUSD which, having held 1.17, seems like a trend that one doesn’t want to get in the way of, in the form of USD longs anywhere.
Ironically, the RBNZ shelfing foreign asset purchases and exchange rate targeting as a policy tool in favour of negative interest rates could lead to a more medium term and sustained decline in NZD, at least on a relative value basis.
It looks highly likely that we will see negative interest rates in NZ in the new year, when banks have gotten past the technical constraints.
AUDNZD seems like a good medium term long, with CB policy divergence and a good round of employment data from Australia overnight.
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