22 Nov 2013
Flash: AUD/NZD bear trend likely to continue - HSBC
FXstreet.com (Barcelona) - As HSBC FX notes, New Zealand has little policy resistance to a stronger currency as inflation pressures build up.
Key Quotes
"Inflation in NZ is in part because of reconstruction efforts in Christchurch, and the RBNZ is preparing to raise rates sometime next year. However, it has argued that sustained strength in the exchange rate that leads to lower inflationary pressure would provide the Bank with greater flexibility as to the timing and magnitude of future increases in the OCR."
"The RBNZ view is in stark contrast to the RBA, where the biggest concern is the slowdown in activity, and the fact that the AUD is still seen at uncomfortably high levels. Downward pressure on the AUD-NZD cross has been building as interest rate differentials have moved in favour of the NZD, and this process is likely to continue."
Key Quotes
"Inflation in NZ is in part because of reconstruction efforts in Christchurch, and the RBNZ is preparing to raise rates sometime next year. However, it has argued that sustained strength in the exchange rate that leads to lower inflationary pressure would provide the Bank with greater flexibility as to the timing and magnitude of future increases in the OCR."
"The RBNZ view is in stark contrast to the RBA, where the biggest concern is the slowdown in activity, and the fact that the AUD is still seen at uncomfortably high levels. Downward pressure on the AUD-NZD cross has been building as interest rate differentials have moved in favour of the NZD, and this process is likely to continue."