Steady RBNZ message boosts the NZD
The RBNZ left rates unchanged and made few changes its rhetoric, repeating that rates will stay at current levels until the end of the year and that the NZD remains high. THE RBNZ remains relatively optimistic on domestic growth, however, which boosted the NZD in the immediate reaction to the announcement. Prior to the meeting, OIS markets were already anticipating nearly a full 25bp rate hike by March suggesting that a fairly optimistic scenario is already priced in. AUDNZD has been in a strong downtrend and appears cheap relative BNP Paribas STEER which indicates a fair value of 1.1730. We would watch the cross for possible buying opportunities. For now, our favoured currency in the commodity space remains the CAD, and we continue to run a short EURCAD recommendation in our portfolio.
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