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RBNZ has some bite behind its bark - BNZ

FXStreet (Bali) - BNZ year-end target is now 0.78 (prev. 0.80), with the end-2015 target unchanged at 0.73.

Key Quotes

"We lowered our near-term NZD track following the RBNZ’s thinly-veiled threats last week. Our year-end target is now 0.78 (prev. 0.80), with our end-2015 target unchanged at 0.73 and a drift lower to 0.68 anticipated by late-2016. The median forecaster, as polled by Bloomberg, sits at 0.77 by end-2016. We recently outlined our thoughts on this longer-term view."

"But we do not anticipate that the Bank will attempt to go toe to toe with the market. The volumes involved are paltry in the scheme of things. On average, the NZD is traded to the tune of $53b per day.1 On that scale, theRBNZ’s net selling in August amounted to less than 0.05% of NZD transactions in that month."

"The RBNZ has routed any remaining speculative element in the NZD market looking for a sustained return above 0.8000. We imagine that the Bank will continue to make smart decisions about rebuffing any rallies. For this strategy to continue working, the USD would need to remain in a broad upswing."

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