NZD/USD Outlook: Up this week
The hawkish surprise from the RBNZ should resound with markets for the next few weeks at least. The RBNZ affirmed its intention to increase the OCR to 3.75% by December 2014 and 5.0% by 2017. NZD bears were squeezed by this surprise and will be reluctant to bet against the RBNZ in the near term. We expect a period of consolidation this week but eventually a break above 0.8700 towards the May high of 0.8780. The main supporting factor is likely to be increasing interest rate carry.
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