24 Jul 2014
RBNZ: Strong language towards NZD main surprise - Westpac
FXStreet (Bali) - According to Westpac, since the pause in the tightening cycle was somehow expected, the main surprise on the RBNZ statement was the language regarding the high NZD exchange rate.
Key Quotes
"The RBNZ’s OCR Review this morning announced a 25bp increase in the OCR to 3.50%, which was widely expected. It also explicitly signalled a pause in the tightening cycle, again widely expected, although some market participants may interpret it as a halt to the tightening cycle."
"Perhaps the main surprise was the language regarding the high NZD exchange rate, “there is potential for a significant fall.” open to interpretation as a veiled intervention threat. Otherwise, the content of the one-page press release was largely as expected."
"In response, the NZD/USD exchange rate fell from 0.8700 to 0.8609, a larger fall than we had expected. It should remain under pressure towards 0.8550. AUD/NZD rose from 1.0865 to 1.0971. It should continue to at least 1.1000."
Key Quotes
"The RBNZ’s OCR Review this morning announced a 25bp increase in the OCR to 3.50%, which was widely expected. It also explicitly signalled a pause in the tightening cycle, again widely expected, although some market participants may interpret it as a halt to the tightening cycle."
"Perhaps the main surprise was the language regarding the high NZD exchange rate, “there is potential for a significant fall.” open to interpretation as a veiled intervention threat. Otherwise, the content of the one-page press release was largely as expected."
"In response, the NZD/USD exchange rate fell from 0.8700 to 0.8609, a larger fall than we had expected. It should remain under pressure towards 0.8550. AUD/NZD rose from 1.0865 to 1.0971. It should continue to at least 1.1000."