New Zealand Dollar
The NZD per se is off the radar screen, as NZD trading appears to follow the fortunes of the equity market, and we get the impression that there isn’t outright strong trade affecting flow at the present. However, expectations for Friday’s inflation update, and the RBNZ cash rate review on April 30, are starting to gain traction.
There are widespread expectations for a low print for March qtr CPI, lowering annual inflation from 3.4% to below 3%. Given the current risk-taking environment, we cannot rule out that a “strong” outcome only further underpins the NZD. However, on the calculations, inflation is set to decelerate, bumping along the bottom of the RBNZ’s target band. And with the NZD trading stronger for longer, the outlook for inflation can only improve.
It is now consensus for the RBNZ to ease by 50bp on April 30. A month ago the consensus was -25bp.
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