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Hardy: Kiwi to continue south and here’s why

A surprise rate cut from the Reserve Bank of New Zealand and a bleak outlook for the economy sent the Kiwi south overnight. Saxo Bank’s John Hardy is looking to trade AUDNZD on the news and here’s why.

In a statement the RBNZ warned of risks of further downside to income and demand growth from weak milk prices, as well as low inflation. The statement also suggested that the risks of a housing bubble in Auckland would be addressed with macro prudential measures.

On the exchange rate, the statement said that “a further significant downward adjustment is justified. In light of the forecast deterioration in the current account balance, such an exchange rate adjustment is needed to put New Zealand’s net external position on a more sustainable path.”

The RBNZ made its policy intentions clear by stating that it expects “further easing may be appropriate.”

01:53 minutes
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