Citi discusses its expectations for NZD outlook around this week's RBNZ policy meeting.
"The potential OCR rate hike from 0.25% to 0.5% at the monetary policy meeting on August 18 this week. A 0.5% rate hike is the risk scenario, but this would be a bigger risk than the probability the local rate market currently prices in. There will be limited room for interest rates to rise in the near future even if a rate hike is officially announced, but NZDUSD is likely to bounce," Citi notes.
"The correction of the pair in July was limited to the –1σ band from the 200d MA, which implies its long-term trend is still upward. The 200d MA (around 0.711) will be achievable on the rate hike delivered by the RBNZ this Wednesday, and we see another scope to appreciate toward the +1σ band (around 0.723) over the following days," Citi adds.