RBNZ Assistant Governor Christian Hawkesby said today that there is no change in forward guidance that OCR will stay at 0.25% until March 2021. Though, “less stimulus is required than we thought in August”, even though a “substantial amount” is still needed. Negative rates is a policy tool for the central bank is needed. But Hawkesby added that it’s less likely if banks use the cheap loans from the new FLP program.
New Zealand Dollar surges this week as markets see less urgency for negative rates due to improvement in outlook. ANZ still expects a cut to negative in August 2021, but it’s now “become a bit of a toss up”.
NZD/JPY’s rally from 59.49 resumes this week with strong break of 71.97 resistance The solid support from 55 week EMA is a sign of medium term bullishness. Focus is now on 73.53 structural resistance. Decisive break there should reaffirm this. NZD/JPY, be it starting an up trend or just correcting the long the down trend, should then target 61.8% retracement of 94.01 to 59.49 at 80.82.
