A rate cut by November 2019 has been fully priced in
Meanwhile, the OIS market is pricing in a 72.4% probability of a rate cut at the RBNZ's 7 August meeting. Prior to the meeting earlier today, markets only priced in a full rate cut on June 2020 so the shift to November 2019 is rather significant and given global economic worries - like China's soft data earlier - it will surely lead to calls for an August rate cut to intensify in the coming months.
With market participants growing considerably dovish on the RBNZ, the kiwi is being hammered today with NZD/USD still lurking near session lows around 0.6800. That said, the thing to consider here is that with markets being so pessimistic on the kiwi and the RBNZ now, any change in the dial for the global economy or domestic data in New Zealand will no doubt help the currency to recover back to the upside as shorts get squeezed.
