New Zealand Dollar a Sell into RBNZ Meeting says Major FX Trader
The RBNZ meets on Wednesday and one foreign exchange trader says the market is too complacent of a surprise that will send the New Zealand Dollar lower.
The Reserve Bank of New Zealand (RBNZ) meeting comes in the wake of the New Zealand Dollar hitting fresh multi-month and multi-year highs against some of its major partners, namely the Dollar and Euro.
This currency strength will unlikely be welcomed by Governor Adrian Orr and his team who will view it as posing a strong headwind at a difficult time for the economy.
Granted, New Zealand has handled the pandemic well but it has only just started vaccinating its population and it will be months before the country reopens its borders to allow the inflow of tourists and students that its economy heavily relies on.
"The NZ economy has performed well over the past year relative to others but the borders are still closed and will remain that way for some time, which damages potential growth from an immigration and tourism perspective," says a note from the JP Morgan spot currency desk in London.
The RBNZ will therefore likely want to stress it will retain a supportive stance over coming months and will try and fight against rising bond yields (which make for tighter lending conditions) and a strengthening currency.
"We’ll hear from the RBNZ tonight and the risk for me is a dovish surprise, I will be looking to be short NZD into the meeting," says JP Morgan.
The RBNZ meets on Wednesday and one foreign exchange trader says the market is too complacent of a surprise that will send the New Zealand Dollar lower.
The Reserve Bank of New Zealand (RBNZ) meeting comes in the wake of the New Zealand Dollar hitting fresh multi-month and multi-year highs against some of its major partners, namely the Dollar and Euro.
This currency strength will unlikely be welcomed by Governor Adrian Orr and his team who will view it as posing a strong headwind at a difficult time for the economy.
Granted, New Zealand has handled the pandemic well but it has only just started vaccinating its population and it will be months before the country reopens its borders to allow the inflow of tourists and students that its economy heavily relies on.
"The NZ economy has performed well over the past year relative to others but the borders are still closed and will remain that way for some time, which damages potential growth from an immigration and tourism perspective," says a note from the JP Morgan spot currency desk in London.
The RBNZ will therefore likely want to stress it will retain a supportive stance over coming months and will try and fight against rising bond yields (which make for tighter lending conditions) and a strengthening currency.
"We’ll hear from the RBNZ tonight and the risk for me is a dovish surprise, I will be looking to be short NZD into the meeting," says JP Morgan.
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