The RBNZ is still calling for a “significant depreciation” of the NZD…
The high exchange rate continues to restrain growth in the traded sectors.
The exchange rate has yet to adjust materially to the lower commodity prices. Its current level remains unjustified and unsustainable. We expect a further significant depreciation, which should be reinforced as monetary policy in the US begins to normalise.
But, also signalling more rises to come later:
In light of these uncertainties, and in order to better assess the moderating effects of the recent policy tightening and export price reductions, it is prudent to undertake a period of monitoring and assessment before considering further policy adjustment. Nevertheless, we expect some further policy tightening will be necessary to keep future average inflation near the 2 percent target mid-point and ensure that the economic expansion can be sustained.
The ambiguity of these statements have pushed the NZDUSD around with the push below support at 0.8207 and then 0.8190, but we’ve seen a rebound back higher. He does say in press conference that the “market sees next rate rise in April of next year”. So with tightening pushed that far out, the price of the NZDUSD should go down. Watching the 0.8190 level again. Stay below the 0.8211 now.
Here is the hourly chart showing the 0.8190 level that needs to be broken – and stay below – to push the pair lower.
NZDUSD needs to get and stay below the 0.8190 level.
