Kiwi is expected to continue depreciating against Aussie after RBNZ held its key interest rate at a record low of 1.75% and signaled it does not intend to raise rates until late 2019, Fullerton Markets analysis shows.
New Zealand dollar slides as much as 1.8% against dollar.
- Some participants in the market anticipated earlier that RBNZ to bring forward the timing of the first rate hike to the first half of 2019, while most of the major central banks have started planning the monetary normalization; Earlier lift in NZD/USD during the overnight U.S. and European sessions was on expectations the RBNZ would bring forward the lift in their OCR* forecast profile.
* Official Cash Rate
- Despite inflation in New Zealand edging higher recently, RBNZ still refrains to hike rates, showing its bias to keep rates low.
- In sovereign bonds market, New Zealand bonds outperform Australian notes, indicating RBNZ’s monetary policy to stay more accommodative than RBA’s.
- Chart shows that AUD/NZD may rise towards Fibo 61.8% level (high, low in May) around 1.0804, if price does not fall below 1.0725.
Fullerton Markets Research Team
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