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Analysts at ING suggest that the New Zealand government’s controversial measure of banning house sales to foreigners stole domestic headlines last week and the economic implications may be muted given overseas investors will still be able to purchase apartments and rental homes.

Key Quotes

“Still, one could expect house price inflation to continue to drift lower – and this further reduces the incentive for the Reserve Bank of New Zealand to press ahead with any pre-emptive tightening (not least after the 2Q PPI data showed muted underlying price pressures).”

“Fading RBNZ rate hike sentiment has been a key additional factor for knocking NZD/USD into a lower range.”

“We expect the pair will trade broadly within the 0.65-0.67 area – with greater risks of a downside breakout should the global risk environment continue to deteriorate. Local calendar sees July trade data on Friday in the week ahead.”