The kiwi got whacked after the Reserve Bank of New Zealand (RBNZ) hiked OCR by “only” 25bps and it could face further headwinds if still lofty expectations for hikes fade, economists at ANZ Bank report.

 >25bp hikes still priced in over the next three RBNZ meetings

“A 25bp hike and 2.6% peak in the RBNZ’s projected track is of course comparatively ‘dovish’.” 

“Despite clear overtones that 25bp increments are likely from here, markets are still pricing in >25bp steps at the next 3 meetings. As that ‘illogic’ gets priced out (which seems likely), the NZD could fly into further headwinds.”