NZD: Pressurized by dovish RBNZ - Westpac

Imre Speizer, Research Analyst at Westpac, points out that NZD/USD finally broke down, below the month-old range bottom at 0.6690 to 0.6665 – the lowest since March 2016.

Key Quotes

“The catalyst for the break lower was the RBNZ’s dovish MPS, where it shifted its OCR forecast lower by as much as 29bp. The RBNZ is now not fully projecting a hike until Q1 2021. A lower growth outlook clearly has the RBNZ concerned.”

“Combined with falling NZ-US yield spreads, the medium term outlook remains bearish.”

“That said, at some point there will be a sharp positioning cleanout (NZD futures speculators are near-record short), for which one catalyst could be a high Q2 GDP print on 20 Sep.”