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12 Mar 2014
Flash: NZD; much depends on Wheelers remarks - RBS
FXStreet (Guatemala) - Strategists at RBS explained that a rate hiking cycle is now largely priced in NZD and RBNZ looks well positioned to lose the race not to be first to hike.
Key Quotes:
“NZD is around record highs on a trade-weighted basis and its rates market may be regarded as priced for perfection”.
“Yet in a carry chasing, low vol world with event risk fading, NZD can still do very well. While there has been some ebbing in housing market activity since the introduction of macro-prudential controls in October last year, the broad array of other indicators suggest the economy remains in a steady strong state, steadily removing excess labour capacity”.
“The economy has been supported by relatively high commodity prices; dairy prices essentially remain around record highs”.
“The burden will be on Governor Wheeler to contain market enthusiasm for NZD and so pointed remarks regarding the potential negative impact of currency strength on competitiveness and growth”.
Key Quotes:
“NZD is around record highs on a trade-weighted basis and its rates market may be regarded as priced for perfection”.
“Yet in a carry chasing, low vol world with event risk fading, NZD can still do very well. While there has been some ebbing in housing market activity since the introduction of macro-prudential controls in October last year, the broad array of other indicators suggest the economy remains in a steady strong state, steadily removing excess labour capacity”.
“The economy has been supported by relatively high commodity prices; dairy prices essentially remain around record highs”.
“The burden will be on Governor Wheeler to contain market enthusiasm for NZD and so pointed remarks regarding the potential negative impact of currency strength on competitiveness and growth”.