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Imre Speizer, analyst at Westpac, notes that NZD/USD continues to decline, this week’s break below 0.6350 signalling a move to the 0.6250 area which was last seen in Sep 2015.

Key Quotes

“Markets have been attuned to the RBNZ’s newfound boldness since the 50bp cut in early August, and will continue to price NZ interest rates with a dovish skew.”

“Today’s business confidence survey captured that 50bp cut, one interpretation of the plunge in confidence to 11-year lows being the magnitude of easing caused some alarm. That aside, confidence has been falling for some time, and the further decline in the “own activity” component – a good contemporaneous indicator of GDP growth – suggests a weak Q3 is on the cards.”

“The main risk to our bearish view is the Fed lowers its rate by more than the 75bp we expect this year (or signals such).”