New Zealand’s Currency Jumps as Traders Brace for 2021 Rate Hike
- Strong survey data sees ASB, BNZ forecast November hike
- Swaps price 90% chance of 2021 hike, policy rate at 1% in 2022
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New Zealand’s currency and short-dated bond yields surged after an upbeat business survey drove traders to bring forward rate-hike expectations, with markets now pricing a total unwind of pandemic-fueled rate cuts by the end of 2022.
The kiwi jumped 1.1%, while the benchmark 2024 bond yields gained as much as nine basis points on Tuesday to hit the highest level since February 2020. A survey by the New Zealand Institute of Economic Research published Tuesday showed more companies expect improved business activities.