RBNZ seen on hold, NZD/USD could test 0.70 – UOB

The RBNZ would remain on hold at its meeting on Thursday, while the Kiwi dollar does not rule out a test of the 0.70 handle vs. the dollar, suggested the research team at UOB Group.

Key Quotes

“New Zealand markets are closed on Monday. Nonetheless, the focus would quickly turn to Thursday’s RBNZ meeting. It is a very close call between unchanged rates of 2.25% or a 25bps cut to 2.00%. Note that the next two RBNZ meetings – 9 June

and 11 August – are full MPS meetings. Although we continue to think that easing is more likely than not at the 9 June meeting, the RBNZ may prefer to wait till the August meeting. That way, it could assess a slew of data, including the Q1 GDP

(16 June), Q2 CPI (18 July) and Q2 labour market reports (3 August)”.

“The key 0.6840 indicated in recent updates was easily taken out last Friday. The subsequent sharp rise in NZD appears to be over-extended but further up-move to 0.7000 would not be surprising. Only a move back below 0.6830 would indicate that current bullish expectation is wrong”.