The
RBNZ will need to make a decision on its interest rate at the end of this month
and don't be surprised to see the Kiwi Dollar gain strength as the month drags
on as traders anticipate an increase in the official cash rate from 2.5% to
2.75% and start to position themselves long on currency pairs such as the
NZDJPY and short on AUDNZD.
The
data is pointing towards a hike in rates in March or April and the RBNZ has
said in recent statements they will raise rates "soon." There is no
reason why the Kiwi Dollar could not reach parity against the Aussie Dollar in
2014 and also continue to rise against the Yen. Growth is running at 3.5%,
unemployment is trending down, house prices are through the roof and New Zealand
looks set to run a budget surplus in 2014-15. Even milk prices are up close to
50% in the past 12 months. Every Central Banker envies the Kiwi economy
right now and whilst its wings may be small there is no reason why the Kiwi
cannot fly.
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