Barclays Research discusses its expectations for tonight's RBNZ policy meeting.
"We expect the RBNZ (Wed) to hike its policy rate by 50bp to 3.50%, broadly in line with OIS market pricing of 52bp. The in-line rate hike should provide little boost to the currency, but RBNZ guidance and assessment of growth-inflation outlook should have a bigger impact on sentiment towards it. The relatively strong fiscal position should also boost the NZD, in our view, reinforced with the Treasury releasing government financial statements (Wed) and the Finance Minister speaking at an event (Thu)," Barclays notes.
"Rate differentials moved in the NZD’s favor last week; 1y ahead RBNZ OIS climbed 14bp to 4.85%, while 10y NZGBs cheapened 12bp, in contrast to the move lower in Fed pricing and rally in UST," Barclays adds.