Decision Primer

The latest RBNZ decision is due in Asia-Pac hours.

• The Bank’s mandate change coupled with NZ domestic data flow has led to some calling for a resumption of the hiking cycle, although this isn’t our Asia-Pac team’s base case (full preview here).
• 22/24 surveyed by BBG look for no change, while 2/24 look for a 25bp hike (ANZ and TD Securities).
• Numerous unchanged calls have hawkish caveats/warnings.
• NZ STIR markets show 7bp of tightening for the meeting (~28% odds of a 25bp hike hike).
• Terminal policy rate pricing sits at ~5.65% through the end of the May meeting, ~60% odds of a 25bp hike by then (current OCR level 5.50%).
• Easing is priced beyond there, with Nov ’24 meeting pricing at ~5.22%.
• The NZD is marginally less susceptible to a hawkish ‘surprise’ than NZ rates given already long positioning (per CFTC data), although there has seemingly been some reduction in longs ahead of the event.
• Ultimately, positioning should not prohibit a rally in NZD if the RBNZ does hike.
• NZD/USD levels to watch: Resistance: 22 Feb high ($0.6218), Support: 15 Feb low ($0.6080).
• AUD/NZD levels to watch: Support: ’24 low/’23 low (NZD1.0570/60), Resistance: Feb 20 high/20-day EMA (NZD1.0649/1.0655).
• On the options side one desk sees “gamma buying in both AUD/NZD and NZD/USD in the lead up to RBNZ, with directional interest leaning towards topside for the former.”