From the FXWW Chatroom – Although the RBNZ did not disappoint, the bank’s signal that the easing cycle could be over was interpreted as hawkish. Indeed, overnight index swaps are now pricing in a 32 percent probability of a 25bps cut over the next 12 months, down from 66 percent yesterday. NZD/USD dipped to a low of 0.6562 following the announcement, holding well above the late November’s low of 0.6515/20. But the subsequent rapid and aggressive rally off the low suggests limited downside risk for the next 1-2 weeks. The up-move could take out the strong 0.6800 resistance but at this stage, a sustained break above the October’s peak of 0.6895/00 is not expected. Overall, NZD/USD is expected to trade between 0.6600 and 0.6900 until end of the year or early next year. [UOB]
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