The New Zealand dollar has laughed in the face of risk aversion and currency weakness in Australia this year. Why? Largely because the Reserve Bank of New Zealand is expected to hike rates in the near future.
The hike could come as soon as Thursday with the OIS pricing a 48% chance of a hike after the RBNZ promised hikes early this year. Forecasters are less committal with only 3 of 17 surveyed by Reuters forecasting a hike this week. The underlying story is that 4 or 5 rate hikes are expected this year. Unless that changes, the market’s belief in NZD is well founded.
The New Zealand Herald has more on the Jan 30 decision (which is late in US trading Wednesday).
