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Sean Callow, analyst at Westpac, suggests that the kiwi was the key beneficiary of the scramble to price in dovish turns by central banks around the world, which has stalled a little this week and was easily the strongest G10 currency over the week.

Key Quotes

“The RBNZ did actually deliver a more dovish outlook than in Nov, returning to the line that “direction of our next OCR move could be up or down.” This was broadly as we expected.”

“But the RBNZ’s interest rate projections still tilt higher, albeit only from 2021, while it played down the rise in the unemployment rate in Q4. Its 0.8%qtr GDP forecast for Q4 also looks optimistic, but that release is not until 21 March. The scale of the kiwi rally looks excessive but near term reversal seems unlikely.”