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Oct 13 - 09:55 AM

ANZ: Key Drivers for NZD Next Week and Tactical Positioning Ahead of NZ Q3 CPI Release.

By eFXdata  —  Oct 13 - 08:36 AM

ANZ provides insights into the expected movements of the NZD for the upcoming week. Although the impending elections are on the radar, ANZ believes that its direct impact on the NZD might be limited. The key determinant for the NZD and RBNZ's rate decision will likely be the Q3 CPI figures and the trade balance data.

Key Points:

  1. Election Impact on NZD: Upcoming elections will be under the spotlight. However, ANZ suggests that the immediate aftermath of the elections might not significantly influence the NZD. The RBNZ's primary concern will continue to be addressing inflation, irrespective of the election's outcome. The pressing matter for the incoming government would be the historically wide deficit.

  2. Q3 CPI & RBNZ Rate Expectations: The Q3 CPI release is anticipated to be a pivotal driver for NZD. ANZ expects headline inflation to register at 6.1% y/y. Currently, the market has priced in a mere 25% chance of a RBNZ rate hike in the upcoming November meeting.

  3. Trade Balance Data: Another vital indicator to watch is the trade balance data, which could shed light on whether China's recent stabilization is positively impacting New Zealand's export figures.

  4. NZD Directional Levels: Potential movement levels for the NZD are:

    • Downside level: 0.5859 (year-to-date low).
    • Upside resistance: 0.5950 (aligned with the 50-day moving average).
  5. Tactical Positioning: Considering potential upside risks to Q3 CPI data, ANZ suggests a tactical approach of positioning short on AUD/NZD, targeting a level of 1.05.

While the elections remain a focal point for many, ANZ emphasizes that Q3 CPI and trade balance data will be more critical for the NZD's trajectory in the coming week. The bank also offers a tactical play on AUD/NZD ahead of the Q3 CPI release, highlighting the potential for market shifts based on the data's outcome. Traders should stay vigilant and monitor the outlined key levels.

ANZ Research/Market Commentary


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