MUFG Research discusses its expectations for this week's RBNZ policy meeting.
"The New Zealand dollar has underperformed other G10 commodity-related currencies at the start of this week ahead of tomorrow’s RBNZ policy meeting. Market participants are expecting a dovish outcome from the RBNZ policy meeting. It follows recent communication from the RBNZ stating that they will review current policy options at their upcoming meeting," MUFG notes.
"The market is anticipating that the current asset purchase limit will be increased beyond NZD60 billion. Any further comments on negative rates or FX intervention will have more impact at weakening the New Zealand dollar. On the other hand, it is not a done deal that the RBNZ will provide more stimulus as soon as this week.
The RBNZ will be aware as well that the New Zealand dollar will strengthen if they disappoint expectations for further easing, and have already expressed concern over recent strength," MUFG adds.