UBS Morning Adviser

NZD: Another Piece Falls Into Place

Overnight, the RBNZ shifted stance and adopted an unmistakable explicit tightening bias, noting that a ‘removal of monetary stimulus will likely be needed in the future’. This is the first step towards an eventual rate hike, which our NZ economist thinks could come as early as December. The news had a sense of near inevitability about it. In anticipation, we went short AUDNZD as a trade recommendation way back on Feb. 1, expecting a gradual convergence of policy settings in Australia and New Zealand.

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