Bank of America Merrill Lynch on today's RBNZ meeting
Bank of America Merrill Lynch Research expects the Reserve Bank of New Zealand (RBNZ) to stay on hold on Thursday.
"No change is expected to policy. But in our view there is a more convincing case for the RBNZ to consider shifting the policy bias toward the normalization of record low interest rates ahead of Australia. There is stronger economic momentum in New Zealand, a better fiscal position that will allow greater pro-cyclical infrastructure spending, improving terms of trade and notably better consumer sentiment than Australia," BofAML argues.
Trade-wise, BofAML recommends long NZD/JPY in the medium-term and is also comfortable selling AUD/NZD on rallies given the likely medium-term divergence in economic paths.
For bank trade ideas, check out eFX Plus.
