\u201cSo the Kiwi-Aussie cross rate is being pulled from both sides; the Kiwi leg is being pulled down by the chance of more Reserve Bank easing, while in Australia they\u2019ve been looking at their data and the possibility of less RBA action.\u201d<\/p>\n
The New Zealand market is pricing in a lower Official Cash Rate (OCR) from the RBNZ than was perceived going into the GDP release.<\/p>\n
Overnight indexed swaps now point to a low of 2.27% in the OCR – about 20 basis points lower than was priced in before GDP.<\/p>\n
In the US, the markets are pricing less policy easing from the Federal Reserve after unexpectedly strong growth data there.<\/p>\n
\u201cThe US last week published quite strong GDP while data flow here is going in the other direction, so I think there is quite a strong international narrative at the moment about New Zealand being the weak player in the G10-G20 currency universe,\u201c Gibbs said.<\/p>\n
Meanwhile, the market is fully pricing in a 25 basis point cut at next Wednesday\u2019s OCR review by the Reserve Bank of NZ, and a 20% chance that it will cut by 50 basis points.<\/p>\n
BNZ said last week was another challenging one for the NZ dollar as it underperformed and fell through the key support level of US58c.<\/p>\n
\u201cAdding to domestic headwinds, stronger than expected US economic data contributed to poor NZD performance,\u201d BNZ said.<\/p>\n
\u201cFundamentally, we think the NZD looks cheap,\u201d BNZ said.<\/p>\n
\u201cWe don\u2019t believe the NZ economy is as weak as the Q2 [second quarter] data portrayed, and this should become evident in data over the coming months. <\/p>\n
\u201cThe market gives no credit to NZ\u2019s record terms of trade and sharply improving external balance,\u201d BNZ said.<\/p>\n
\u201cWe also see plenty of scope for US economic data to deteriorate from here.\u201d<\/p>\n
Jamie Gray is an Auckland-based journalist, covering the financial markets, the primary sector and energy. He joined the Herald in 2011.<\/p>\n","protected":false},"excerpt":{"rendered":"\u201cSo the Kiwi-Aussie cross rate is being pulled from both sides; the Kiwi leg is being pulled down…\n","protected":false},"author":2,"featured_media":178113,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[32465,9490,64,63,99,2458,57656,71299,2003,16914,115130,27452,164,17119,19433,1697,1655,36020,27643,115129,23180,13056,19004,4208,3205],"class_list":{"0":"post-178112","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-month","9":"tag-after","10":"tag-au","11":"tag-australia","12":"tag-business","13":"tag-data","14":"tag-dip","15":"tag-disappointing","16":"tag-dollar","17":"tag-domestic","18":"tag-downward","19":"tag-earlier","20":"tag-economy","21":"tag-gdp","22":"tag-june","23":"tag-nz","24":"tag-pressure","25":"tag-quarter","26":"tag-release","27":"tag-remained","28":"tag-still","29":"tag-suffering","30":"tag-this","31":"tag-under","32":"tag-zealand"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/178112","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=178112"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/178112\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/178113"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=178112"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=178112"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=178112"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}