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Flash: Forces affected the NV economy speech – TD Securities

FXstreet.com (London) - Alvin Pontoh, FX & Rates Stratergies at TD Securities said that RBNZ Governor Wheeler’s delivered his highly-anticipated speech on “Forces affecting the NZ economy and policy challenges around the exchange rate and housing market”. The headlines focussed on the ‘significantly overvalued’ NZD, and the ‘threat’ of further currency intervention as the NZD is ‘not a one-way bet’, again concluding that the RBNZ stands ready to act.

However, the noted that he RBNZ FX transactions data released a few hours later revealed that the Bank net sold only $NZ256m in April, which was far short of market expectations for at least $NZ500m-1b. (The data confirms that the “foreign currency intervention capacity” shrank from $NZ8.70b to $NZ8.48b after the net intervention of $NZ256m.) He explained that the other half of the speech focused on ‘housing pressures’, whereby house prices are also ‘over-valued’ and ‘could continue rising for some time’. His bottom line on all of this is: ‘Crossing fingers that macroprudential tools and intervention will work to cure these imbalances is not sound policy’.

GBP/USD trading at 1.5172 resistance

The GBP/USD recently traded in the heights of 1.5187 (session high) Thursday, as this region proved to temporarily cap any additional upside for now.
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