Here is why we are wary about chasing NZD rallies post-RBNZ – ING | Forexlive

ING Research adopts a cautious bias on NZD, despite the RBNZ’s surprise 50bps hike this week.

NZD/USD jumped more than 1.0% after the hike but then halved its
gains. While markets almost fully price in another 25bp rate hike, this
is not a given. There is a chance the RBNZ has front-loaded tightening
but may struggle to push tightening further if inflation fails to stay
high,” ING notes.

“That said, even in the event of another hike and the 5.50%
projected peak rate being reached, we think the chances of rate cuts by
the end of the year have now increased materially, and markets are
likely underestimating them. This is why we would be wary about chasing
NZD rallies,” ING adds.

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