The New Zealand dollar has recovered from a multi-week low to 0.6405 ahead of the RBNZ meeting. What’s driving the NZD?
10 February 2020 | HYCM – The Reserve Bank of New Zealand (RBNZ) monetary policy decision is due Wednesday 12 February 2020 at 01:00 GMT.
What’s driving the New Zealand dollar ahead of the RBNZ?
When the RBNZ last met, they surprised the markets by keeping a bullish hold at 1.00% vs expectations of a cut to -0.75%. The committee agreed that the general risks to the NZD economy were tilted to the downside. So they agreed it would add further monetary stimulus if economic developments warranted it.
So, the RBNZ has been in a data-dependent mode since the November hold. The data has been generally good for the RBNZ since the November rate decision:
- Feb 04: Unemployment rate falls to 4.0% vs 4.2% expected
- Jan 23: Q/Q CPI inflation at 0.5% vs 0.4% expected, 1.9% y/y vs 1.8% y/y (RBNZ’s y/y target range is 1-3%)
- Jan 13: NZIER Business confidence -21 (negative, but still lifting from low levels)
- Dec 18: GDP 0.7% vs 0.5% expected
Where now for the RBNZ?
However, the outlook for New Zealand is tempered somewhat by the coronavirus outbreak expected to weigh on GDP figures. Both ANZ and BNZ have cut their growth forecasts for New Zealand’s GDP projections. The current expectations are 6% for a rate cut at this Feb 12 meeting. Also, an ‘on hold’ decision is the current market expectation. Any deviation from this outlook will result in a tradable sentiment shift.
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