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Forex Flash: RBNZ to first hike rates in Dec 2013 - BNZ

The Reserve Bank of New Zealand will begin hiking rates in December this year and "the cash rate will then be progressively raised to a 'new neutral' of 4.5% in the following 15 months" notes Craig Ebert, analyst at the bank.

Craig expands: "This remains a more aggressive view than either the Reserve Bank’s outlook. Yet we remain quietly confident that inflationary pressures will build to justify this as (a) spare capacity in the domestic economy disappears, particularly with the onset of the expected construction boom and (b) the disinflationary pressure attributed to the currency begins to wane."

"It will take time for the data to provide justification for the market to adopt this view" Craig says, reminding us that "at the moment, the market is ascribing a 25% chance of a first hike in September and around a 60% chance of a hike by December."

Forex: EUR/JPY unchanged below 125.00

EUR/JPY is totally flat for the week so far at 124.85 last, as USD/JPY is slightly higher and EUR/USD is slightly lower. Nikkei index opened printing yet another fresh high shy of the 11400 points mark, highest since Sept 2008, up +0.83% for the day so far, while upcoming BoJ's chief Kuroda was giving a speech. Japan Core machinery orders data fell -13.1% in Jan on monthly basis, while -9.7% year on year.
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Forex: NZD/USD tries to set a base at 0.82

After briefly breaching the 0.82 mark on the back of a strong NFP number last Friday, with 0.8197 now the lowest of the year for the Kiwi, the pair has been picking up ever since, and is now pressing against 0.8225, area that may be acting as supply, just as it did in the slide from Feb 27 and the half-hearted attempt of recovery in the last New York session.
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