Trading the RBNZ on hold – TD Securities
Analysts at TD Securities offer a sneak peek at what to expect from Wednesday’s Reserve Bank of New Zealand’s (RBNZ) Interest Rate Decision due at 0100 GMT.
“The RBNZ is expected to keep the cash rate on hold at 1% tmrw. Data has beat RBNZ's Nov MPS f/c's - GDP @ 0.7%/q vs 0.3%/q RBNZ; CPI @ 1.9% vs 1.6% RBNZ; unemployment @ decade lows, 4% vs 4.2% RBNZ, Wage growth is @ 10yr highs; House prices are advancing; Terms of Trade/Building Permits nr record highs; Fiscal policy is on the table; Finally offshore risks (Brexit/Trade War) have receded since Nov'19.
Such beats should warrant f/c upgrades and the removal of an easing bias. However, we expect the OCR profile & other f/c's should remain largely unchanged. The coronavirus is likely to hit Q1 f/c's but it's difficult to extrapolate beyond as impacts are unknown. The Bank is likely to acknowledge the risks and stand ready to act as required.”
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