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15 May 2015
RBNZ: Premature ideas on easing - TDS
FXStreet (Guatemala) - Richard Kelly, Head of Global Strategy at TD Securities offered their trading ideas around the RBNZ while switching from dovish to neural.
Key Quotes:
"Fade RBNZ easing risk as too much too soon and sell Dec15 IB future at 96.80, targeting 96.50, stop at 96.40."
"We called for an RBNZ rate cut early this year but reverted to unchanged as the RBNZ felt too secure in their view in our opinion, even as inflation deviates significantly from target."
"With what was obvious to us at the start of the year now increasingly recognized elsewhere, the market has moved to fully price one 25bps rate cut this year and is two-thirds priced for a second."
"This means within OIS, there is only 8 more bps of cuts to price in for 50bps of easing, but potentially 42bps of easing to remove if the macro outlook holds up."
"We think recent data suggests the doves will be disappointed, at least in the short-term. So while easing may be possible eventually, it seems premature at the moment given better domestic data and a weaker USD trend for the time being."
Key Quotes:
"Fade RBNZ easing risk as too much too soon and sell Dec15 IB future at 96.80, targeting 96.50, stop at 96.40."
"We called for an RBNZ rate cut early this year but reverted to unchanged as the RBNZ felt too secure in their view in our opinion, even as inflation deviates significantly from target."
"With what was obvious to us at the start of the year now increasingly recognized elsewhere, the market has moved to fully price one 25bps rate cut this year and is two-thirds priced for a second."
"This means within OIS, there is only 8 more bps of cuts to price in for 50bps of easing, but potentially 42bps of easing to remove if the macro outlook holds up."
"We think recent data suggests the doves will be disappointed, at least in the short-term. So while easing may be possible eventually, it seems premature at the moment given better domestic data and a weaker USD trend for the time being."