China's Refining Industry Faces Major Shakeup Amid Challenges 
US Gas Market Poised for Supercycle: Bernstein Analysts 
UBS Predicts Potential Fed Rate Cut Amid Strong US Economic Data 
Oil Prices Dip Slightly Amid Focus on Russian Sanctions and U.S. Inflation Data 
UBS Projects Mixed Market Outlook for 2025 Amid Trump Policy Uncertainty 
Trump’s "Shock and Awe" Agenda: Executive Orders from Day One 
Bank of America Maintains Forecast for Two Fed Rate Cuts in 2026 Despite Inflation Risks 
Gold Prices Slide as Rate Cut Prospects Diminish; Copper Gains on China Stimulus Hopes 
China’s Growth Faces Structural Challenges Amid Doubts Over Data 
Lithium Market Poised for Recovery Amid Supply Cuts and Rising Demand 
Wall Street Analysts Weigh in on Latest NFP Data 
RBNZ Holds Rates at 2.25% as Middle East Conflict Fuels Inflation Concerns 
US Futures Rise as Investors Eye Earnings, Inflation Data, and Wildfire Impacts 
Bank of Korea Governor Nominee Warns of Action if Korean Won Weakens Further 
Bank of Japan Eyes Further Rate Hikes Amid Middle East Tensions and Inflation Pressures 
Bank of Japan Signals Rate Flexibility Amid Yen Volatility 
In this write-up, we emphasize on the disparity between the NZD IV skews and the long-term underlying projections. Well, please be noted that 1w IV skews of NZDUSD have been stretched on either side (refer above nutshell, it signifies both upside and downside risks ahead of RBNZ’s monetary policy meeting for its OCR, which is scheduled on November 7th), both OTM call and OTM put strikes have equal chances of expiring in-the-money.
Whereas Kiwis dollar’s (NZD) weakness has been prolonged in sympathy with high-beta FX. This led us to slightly lower our NZD forecasts last month to reflect risk of ongoing negative news-flow relating to EM. In contrast to Australia, where the export-relevant commodity markets are already tight, New Zealand is unlikely to benefit from a redistribution of China’s GDP growth toward fixed asset investment. Rather, its mostly agricultural export basket is more exposed to softer EM Asian growth in aggregate (refer 1stchart).
The projections for NZD to end 3Q’19 at 0.61. There have also been important domestic drivers of NZD’s slide this year. The RBNZ has maintained dovish rhetoric, despite the fact that the 2Q GDP data came in better than expected. Looking at annual rates, GDP growth clearly has slowed, relative to the bullish rates that prevailed at the immigration peak over 2014-16. This is significant given that even over that extremely strong window for growth, the central bank struggled to lift inflation (refer 2ndchart).
RBNZ Governor Orr has highlighted that the OCR will need to be on hold until 2020, in order to push growth back above 3%. As with AUD, we expect ongoing confirmation that the central bank can credibly lag policy normalization in the G3, which should see the currency sustain recent devaluation even if EM outflows stabilize.
Currency Strength Index: FxWirePro's hourly NZD spot index is inching towards 113 levels (which is bullish), hourly USD spot index was at 10 (neutral), while articulating (at 13:22 GMT). For more details on the index, please refer below weblink:
