FXStreet (Delhi) – Mansoor Mohi-Uddin and Paul Robson, Research Analysts at RBS, note that in its October policy statement, the RBNZ noted that "global dairy prices have risen in recent weeks, contributing to improved household and business sentiment.
Key Quotes
“However, it is too early to say whether these recent improvements will be sustained." The last three weak dairy auctions are important in that context; with just one more auction to come before the December 9 policy meeting. Futures markets are pricing circa 9bp of easing.”
“While conscious of positioning risks into the meeting, we are sellers of NZD/USD rallies. The extent of any NZD weakness will depend on whether RBNZ expresses concern about slower growth abroad, most obviously in China and East Asia. While we expect a dovish tone from the RBNZ, it may not be aggressive enough to see the currency weaken significantly.”
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