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6 Jun 2014
Not strong argument for the RBNZ to hike next week - RBS
FXStreet (Bali) - Greg Gibbs, FX Strategist at RBS, shares his thoughts on the FX market, noting that arguments for another rate increase by the RBNZ next week are running low.
Key Quotes
"The ECB have eased policy significantly and implied rates will stay low much longer than the Fed. Price action in the EUR suggests it may firm short term, but it is hard to see a sustained rally."
"We continue to remain constructive on the USD though admit a broad risk asset rally near term may work against it."
"As occurred post-BoJ policy easing in April last year, we watch for evidence that the Fed worries more about excessive financial instability risks and stronger US economic data build the case for policy tightening in the US, supporting the USD more broadly."
"We still fail to see a strong argument for the RBNZ hiking next week despite the market pricing the odds over 90%; as such our bias into the 12 June meeting is to receive short term rates and sell the NZD."
Key Quotes
"The ECB have eased policy significantly and implied rates will stay low much longer than the Fed. Price action in the EUR suggests it may firm short term, but it is hard to see a sustained rally."
"We continue to remain constructive on the USD though admit a broad risk asset rally near term may work against it."
"As occurred post-BoJ policy easing in April last year, we watch for evidence that the Fed worries more about excessive financial instability risks and stronger US economic data build the case for policy tightening in the US, supporting the USD more broadly."
"We still fail to see a strong argument for the RBNZ hiking next week despite the market pricing the odds over 90%; as such our bias into the 12 June meeting is to receive short term rates and sell the NZD."