An August Reserve Bank of New Zealand rate cut looks like a 50-50 event. The RBNZ turned dovish in July, but non-tradable CPI, employment growth and wage inflation were all above the May projections for 2Q, ING’s FX analysts Francesco Pesole and Chris Turner note.

A move above 0.61 is a tangible possibility

“We narrowly favour a hold in August but see a greater chance that the RBNZ will cut 50bp in October, after the Fed has moved first. Ultimately, with over 90bp of easing priced in by year-end, the difference between a hawkish cut and a dovish hold may not be huge: we still think easing bets can be trimmed by year-end.”

“We remain bullish on NZD/USD in the near term. A move above 0.61 is a tangible possibility ahead of a 50bp rate cut by the Fed in September and thanks to risk sentiment stabilisation.”