Credit Agricole CIB Research previews tonight's RBNZ July policy meeting.

"The market is too complacent about a rate hike by the RBNZ on Wednesday. The rates market is about 70% priced for a 25bp hike after the central bank narrowly missed hiking rates in May in a split vote where the Governor Anna Breman cast the vote to keep rates on hold. We think that this week's meeting will be another close call and a split vote," CACIB notes.

"The knee-jerk reaction in the NZD would be lower in the event of the RBNZ holding off raising rates. We think this move lower in the currency would be restricted by hawkish rhetoric and the view that the RBNZ is merely delaying the inevitability of higher rates by only six weeks and until the next MPS," CACIB adds.