Credit Agricole CIB FX Strategy Research notes that the RBNZ is widely expected to leave the OCR at 1.75% at its June meeting.
“Governor Graeme Wheeler is also likely to begin referring to the exchange rate as significantly overvalued once again given its recent outperformance. New Zealand’s economic data has also started to underwhelm, but the currency is yet to follow. The New Zealand TWI is also significantly above the forecasts it published in its May SMP.
We doubt that the RBNZ will go so far as to threaten rate cuts to weaken the currency, but could indicate a longer on-hold projection if the currency remains strong,” CACIB adds.
CACIB maintains a long AUD/NZD* position from 1.0460 targeting a move to 1.08.
Source: Credit Agricole CIB Research
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