What To Worry About

The NZD has been by far the strongest performing G10 currency over the past fortnight. Globally, a modest pullback in the USD has been the dominant driver of currency markets. However, domestic factors have also helped spur the recovery in the NZD. Last week, the RBNZ explicitly warned, for the first time, that the next move in rates is up. This shouldn’t have been a surprise. But it did send OIS markets scrambling to price in earlier hikes. As a result, NZ-US interest rate differentials were propelled to their highest level since September 2011.

Read the full report: Market Research



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