Free Trial

RBNZ Delays Capital Buffer Increase, Consults About Reinstating LVRs Ahead Of MPS

NZD

NZD/USD wavered Tuesday, but managed to extend its winning streak to seven straight sessions at the end of the day. There was little new to drive price action, which prompted a reassessment of familiar risks.

  • Main focus today falls on the RBNZ's last MonPol decision of the year. We have published our comprehensive of the upcoming MPS - click hereto access. Policymakers are expected to unveil the details of a Funding for Lending Programme, to be launched by the year-end.
  • Mind that New Zealand's central bank has since published a statement noting that it will consult about the re-introduction of LVR restrictions on high risk lending, effective from Mar 1. We flagged that the pace of house price inflation remains a concern. FinMin Robertson lauded the RBNZ's decision to consider reinstating LVRs as "sensible".
  • In addition, the RBNZ said that it "is further delaying the start of increases in bank capital until [July] 2022" to give lenders the chance to respond to the impact of the Covid-19 pandemic.
  • NZD/USD last trades flat at $0.6830, just shy of cycle highs. A clean break above Nov 9 high of $0.6855 would confirm that the uptrend is intact, opening up the $0.6939-42 zone, which capped gains in 1Q2019. Bears look for a dip through the 23.6% retracement of the Sep 24 - Nov 9 rally/Nov 9 low at $0.6774/73 before targeting the 50-DMA at $0.6662.
  • Later in the week, focus moves to BusinessNZ M'fing PMI & food price index, both due Friday.

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.