NZD: RBNZ holds rates, upcoming data key – ING

The Kiwi dollar fluctuated after the RBNZ held overnight, and is now back at yesterday’s 0.600 close, ING's FX analyst Francesco Pesole notes.

NZD/USD to target levels close to 0.590 later in the summer

"Bets on a rate cut were close to zero, and there isn’t anything particularly surprising in the RBNZ statement. Policymakers are still generally minded to cut rates again, but conditionality is now much higher given inflation concerns and swings in global trade news."

"Short-term NZD swap rates initially jumped some 5bp on the announcement but then retreated as markets continued to see a strong case for another rate cut by the end of the year. We tend to agree, but admit that pricing can shift quite abruptly as the infrequently released inflation (20 July) and jobs (5 August) data for the second quarter come due."

"Like AUD the Kiwi dollar is less exposed than most other G10 currencies to US tariffs, both directly (only 10% 'Liberation Day' tariff rate) and thanks to China having secured a deal that shields it from this round of protectionism threats. We see some downside risks for NZD/USD and target levels close to 0.590 later in the summer mostly due to expectations of higher inflation in the US and a hawkish Fed repricing."