Deutsche Bank on a potential surprise from the RBNZ:
The market should be nervously watching the RBNZ for any hints it may intervene against the overvalued NZD, as house price inflation poses a high bar to an OCR cut, Deutsche Bank analysts write.
"One reason the RBNZ may be closer to intervening than the market assumes is that its official Trade-Weighted Index overstates the kiwi dollar's depreciation over the past year by omitting third-country effects," Deutsche Bank say.
"It must therefore take its own TWI with a large pinch of salt. Benchmarking against alternative TWIs should lead the RBNZ to discount the fall in the TWI over the past year, giving it even greater reason to intervene against the strong NZD," Deutsche Bank says.
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