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The Reserve Bank of New Zealand delivered a firm hawkish pivot. The kiwi leaped over 1% after the RBNZ left its interest rate unchanged and implied a rate hike is on the agenda, perhaps even for later this year. Economists at TD Securities see more upside in NZD/USD and NZD/CAD.

See:  NZD/USD  to see considerable gains toward 0.78 as RBNZ signals policy tightening – CE

RBNZ swoops in hawkish

“The RBNZ was fairly hawkish across the board, positively revising its growth, inflation and employment projections. Most notably, the Bank brought back its traditional OCR profile as we thought they might, which penciled in a hike by Q3-2022. This is, of course, where market pricing currently resides. Consequently, we have revised our call for the first RBNZ hike to come in August 2022 from Q3-2023.”

“We are tactically long NZD/USD this week, but we think there could be larger gains ahead towards 0.75.”

“While we still expect the CAD to remain resilient vs. the USD, NZD/CAD still has some room to progress towards trend resistance near 0.8900/50.”