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Countdown On For RBNZ Announcement

NZD

NZD/USD treads water ahead of the announcement of the RBNZ's monetary policy decision (see our preview for more colour). The rate is happy to oscillate within the confines of yesterday's range as participants await the release of the statement.

  • Most expect the Monetary Policy Committee to hike the OCR by 25bp even as New Zealand's renewed outbreak of Covid-19 persists. All but one analyst surveyed by Bloomberg anticipate this scenario (the dissenter from BBG Economics calls for a rate hold), while the OIS strip prices an ~86% chance of a standard-sized OCR lift-off.
  • Yesterday, NZD/USD overnight implied volatility spiked to its highest point since the previous Monetary Policy Review and topped out at 20.54%. It has eased off somewhat and last sits at 15.91%.
  • Should the RBNZ decide to tighten policy today, it would be the first OCR hike in seven years. As a reminder, this is an interim Monetary Policy Review, so there will be no updated forecasts or press conference.
  • NZD/USD changes hands at $0.6962 as we type. If Oct 4 high of $0.6982 gave way, bulls would be able to take aim at the 50-DMA at $0.7011. Bears set their sights on $0.6860, which limited losses on both Sep 29 and Sep 30.

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