New Zealand Dollar: Bearish stance maintained on rate hike pricing – TD Securities
TD Securities’ FX strategist Howard Du maintains a bearish New Zealand Dollar (NZD) bias, noting that Reserve Bank of New Zealand (RBNZ) tightening is largely priced and NZD positioning has normalized.
TD Securities' FX strategist Howard Du maintains a bearish stance on the New Zealand Dollar (NZD), stating that the Reserve Bank of New Zealand (RBNZ) rate hikes are already priced in and NZD positioning has normalized. They forecast AUD/NZD to stay above 1.20, with an end-of-year projection of 1.22, while considering a high threshold for NZD/USD to sustain gains above 0.60, despite global USD weakness.
Since the hawkish July RBNZ rate hike, FX markets have reduced short NZD positions against both the USD and AUD, with no new data evidence to deviate from the RBNZ's latest OCR guidance. Consensus expectations remain for another RBNZ rate hike at its upcoming meeting, with cumulative RBNZ rate hike pricing in 2026 appearing elevated compared to the rest of the world.
The Q2 non-tradable CPI for New Zealand showed muted growth compared to the headline, hinting that risk may be shifting towards New Zealand inflation converging lower with the rest of the world, potentially easing some rate hike pressure for the RBNZ.
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