Profit Mongers @ 1:21 PM, Wednesday December 07 2011
1500 NZD Interest Rates m/m (+2.5% expected, +2.5% prior, +2.5% unanimous)
All 15 analysts polled by Bloomberg expect no change in Rates today from the RBNZ. Australia
did lower rates on monday but other countries in the East are expected to hold rates for now
as they appear to be weathering the financial shocks pretty well. Korea and Indonesian interest
rate announcements will also come later during the Asian session. The predictions for now is
to hold but by March, 4 out of 15 analsyts expect the RBNZ to actually hike rates. Forecasts
in september are for GDP to hit 3.1% in the year of 2012-2013 and CPI at 2.3% in 2013. The
target range is 1-3%. Rebuilding from the damage left from the Earthquake is ongoing and
RBNZ's Bollard said in October that monetary policy should not be stimulated during a rebuilding
period. However 30% of New Zealand's economy is from exports and it is not immune to a global
slowdown, this is why many analsyts are not betting on a rate hike any time soon. Last month
there was no change expected nor none made, despite this the NZDUSD rallied +60 pips in 10 minutes,
pulled back 15-20 pips and then moved another 30-40 pips higher than this. This was all due to
the statement, this is traders will be watching. Those waiting for a rate change to catch an spike
trade may have to be patient for a few more months, although we do hope that when the RBNZ do a
rate change it is a surprise and the analysts have not already priced it into expectations, although
there will still be some move on a confirmation. Also watch out for any hints in Bollards statement
the will crush these predictions for a rate hike in March. That seems to be the most likelyhood for
a trade, but Bollard is caught between domestic rebuilding post-earthquake and the global economic
slowdown blowing in from the Eurozone and the web of interlinked global debt. Watch out to any
revisions to RBNZ Governor Bollards GDP and CPI estimates, if these are changes it will affect the
price of the Kiwi Dollar as well. The forward looking PPI figures did deviated below expectations
in mid-November so if inflation is so inflation might not be an issue requiring rate hikes.
If they hike, buy NZDUSD, NZDJPY or sell EURNZD, AUDNZD or GBPNZD
If the cut, sell NZDUSD &/or NZDJPY or buy EURNZD, AUDNZD or GBPNZD
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