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Imre Speizer, analyst at Westpac, suggests that yesterday’s RBNZ-led bounce in NZD/USD should be short-lived, with 0.6900 likely to cap it during the week ahead.

Key Quotes

“Markets (and we) were expecting a more dovish assessment by the RBNZ yesterday, but that may yet come, at the next meetings in March and May. Ahead of that, we will see Q4 GDP which should be much lower than the RBNZ has forecast, and probably return market pricing to an 80% chance of a rate cut (from 50% currently).”

“Domestic factors aside, our expectation that the Fed retains a tightening bias, contrasting to the RBNZ’s neutral one, should keep the NZD under downward pressure over the next few months towards 0.6600.”