EURNZD – eyeing expressions of EUR shortsAfter a rally into 1.7935, the structure in the flow and the set-up has changed, and the sellers are starting to dominate. We’ve seen a daily close through the rising uptrend (drawn from the Jan lows), with a strong rejection of the 200-day MA.
Fundamentally we’ve heard a more hawkish assessment today from the RBNZ chief economist Paul Conway that “non-tradeable inflation was higher than expected” and “is a long way from 2%”. ANZ Bank is now even saying that a 25bp rate hike from the RBNZ on the 28 Feb meeting can’t be ruled out. Contrast this to expectations of ECB policy, with the ECB opening the door to cuts from the March meeting and the balance of risk is skewed to lower levels. This Thursday’s EU CPI print (at 21:00 AEDT) could have significant implications for EUR pairs, so monitor exposures over this data. A core CPI print below 3% opens the prospect of a 25bp cut at the March ECB meeting, although April is still the default date starting point.
