2 May 2016
NZ market has backed off prediction of sub-2% OCR – Westpac
Imre Speizer, Senior Market Strategist at Westpac, notes that the NZD/USD was in a week-old slump when the RBNZ surprised markets by holding the OCR steady at 2.25% and repeating the previous easing bias.
Key Quotes
“Markets had ramped up pricing for a rate cut to a 46% chance, and even those who expected an on hold decision (most of the analyst community) expected the guidance to be strengthened to effectively signal a June rate cut.
The outcome caused NZD/USD to jump 1c to 0.6940, and 2yr swap rates to rise 7bp (a large move, compared to the daily average over the past year of 2bp). Swap markets had earlier priced a 50% chance of a sub-2% OCR, but they are now at 20%. NZ data and global sentiment will clearly be important ahead of the 9 June MPS.”
Key Quotes
“Markets had ramped up pricing for a rate cut to a 46% chance, and even those who expected an on hold decision (most of the analyst community) expected the guidance to be strengthened to effectively signal a June rate cut.
The outcome caused NZD/USD to jump 1c to 0.6940, and 2yr swap rates to rise 7bp (a large move, compared to the daily average over the past year of 2bp). Swap markets had earlier priced a 50% chance of a sub-2% OCR, but they are now at 20%. NZ data and global sentiment will clearly be important ahead of the 9 June MPS.”