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Analysts at TD Securities note that the RBNZ left the cash rate at 1.75% as widely anticipated, and forward guidance a repeat of August, where “We expect to keep the OCR at this level through 2019 and into 2020. The direction of our next OCR move could be up or down”.

Key Quotes

“We expected Governor Orr to emphasize low inflation and weak business confidence, but the statement was constructive, noting solid domestic demand, full employment, and positive backdrop for continued export growth, trade tensions notwithstanding.”

“AUDNZD has been trading in a 1.09-1.10 range for some time, a little surprising since Orr tends to out-dove the RBA at every turn (RBA doesn’t discuss rate cuts).”

“Going forward, we expect Governor Orr to keep pressure on the NZD, putting a floor under AUDNZD at 1.085. The 2yr swap rate is a little lower at 2.03% and OIS is 25% priced for an August 2019 cut. We still see the next move being up for the OCR, and pencil in November 2019.”