RBNZ Meeting and RBA Speech On The Radar | NZD/JPY
Our preference: under pressure below 67.95.
Alternative scenario: above 67.95, look for 68.15 and 68.27.
RBNZ are expected to hold tomorrow,
which could leave potential for NZD crosses to bounce is there’s no easing bias in their statement.
Unless of course RBNZ want to throw another curveball and cut another 25 bps. On the 7th August,
RBNZ went above and beyond with a 50-bps cut, catching many off-guard who were expecting a 25-bps of easing.
Yet this aggressive stance is also why many expect for RBNZ hold tomorrow and await further data.
Currently the 1-month OIS is suggesting a mere 11% chance of a cut tomorrow and all economists polled by Reuters expect RBNZ to hold this month. GDP beat expectations last week and their TWI trades at a 4-year low, beneath their projection of 73 laid out in August’s monetary policy statement (ie good for exports and inflation). Therefore, a neutral hold and bounce for NZD is a potential scenario. That said, RBNZ aren’t known to mince their words so any dovish elements in tomorrow’s statement could see NZD extend their losses if traders suspect another cut may be on the horizon.