The New Zealand dollar is on the back foot against a stronger USD, but RBNZ’s steady dovish messaging leaves the policy outlook well-anchored. With markets pricing two cuts by year-end, resilient global growth and a softer Fed stance could still lend NZD/USD modest upside support, BBH FX analysts report.
RBNZ’s Hawkesby signals OCR path to 2.50% by year-end
"NZD/USD is trading on the defensive on broad USD strength. RBNZ Governor Christian Hawkesby sticks to the bank’s dovish script. Hawkesby stressed that 'While our central projection for the OCR is to fall to around 2.50% by the end of the year, that could occur faster or slower depending on how the economic recovery evolves'."
"The next RBNZ meeting is on October 8, and markets price-in nearly 90% odds of a 25bps cut and a total of 50bps of easing by year-end to 2.50%. Regardless, NZD/USD can edge higher supported by resilient global economic activity and a dovish Fed policy stance."
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