ANZ gives up its NZD outlook forward of the November RBNZ assembly

ANZ highlights that the upcoming RBNZ assembly is unlikely to spark a optimistic shift for the NZD. Market expectations of a 50bp price reduce align with ongoing dovish coverage tendencies, conserving draw back strain on the NZD towards the USD and AUD. Whereas year-end seasonality might present some upside, near-term prospects stay impartial to adverse.

Key Factors:

• RBNZ Assembly Expectations:

  • ANZ expects a 50bp price reduce, in line with market pricing.
  • Latest RBNZ conferences have been NZD-negative, with even “hawkish” surprises yielding solely temporary positive factors.
  • A extra dovish consequence, corresponding to a 75bp reduce, might end in a 1% or extra decline in NZD/USD.

• Financial Backdrop:

  • New Zealand’s exercise information, together with PMI and PSI, stays gentle regardless of slight enhancements from June cycle lows.
  • Constructive surprises in Q3 GDP and employment information haven’t modified the broader development of financial weak spot, supporting additional RBNZ price cuts.

• NZD Efficiency:

  • Downward strain on NZD/USD and AUD/NZD is more likely to persist, with AUD/NZD anticipated to carry above 1.10.
  • 12 months-end seasonality might present some upside for the NZD, however present market circumstances stay unfavorable for sustained positive factors.

Conclusion:

ANZ stays impartial to adverse on the NZD heading into the November RBNZ assembly. Whereas a 50bp price reduce is predicted to have a restricted impression, the dovish coverage outlook and weak financial information preserve draw back dangers intact. Any potential NZD upside into year-end will doubtless be constrained by the difficult market backdrop.

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This text was written by Adam Button at www.ubaidahsan.com.



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