Forex Flash: Today's fall in the NZD/USD an overreaction - BNZ
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NZD/USD
FXstreet.com (Barcelona) - The under-performance of the Kiwi today, according to Mike Jones, currency strategist at Bank of New Zealand, "reflects a delayed reaction to some comments from Prime Minister Key last night after he said the RBNZ has 'room to move' and the high NZD 'takes pressure off the RBNZ'".
Mr. Jones adds: "While some media outlets have reported Key as suggesting the high NZD provides scope for the RBNZ to cut rates, we haven't seen any direct quotes to confirm this is the case. Key has said before the RBNZ has room to lower rates if it has to. Indeed, this policy ammunition is a good thing if we think about the position of Europe, the UK, and US. But he didn't expressly link the possibility of RBNZ policy loosening to the high NZD. We certainly doubt the PM is attempting to sway the new RBNZ Governor. From this perspective, the falls in the NZDUSD look to be an overreaction."
Mr. Jones adds: "While some media outlets have reported Key as suggesting the high NZD provides scope for the RBNZ to cut rates, we haven't seen any direct quotes to confirm this is the case. Key has said before the RBNZ has room to lower rates if it has to. Indeed, this policy ammunition is a good thing if we think about the position of Europe, the UK, and US. But he didn't expressly link the possibility of RBNZ policy loosening to the high NZD. We certainly doubt the PM is attempting to sway the new RBNZ Governor. From this perspective, the falls in the NZDUSD look to be an overreaction."
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