The market expects a flat Q3 CPI print for New Zealand this week, and the RBNZ has also indicated it sees risks to its 0.1% q/q forecast to the downside. We consider a negative print highly unlikely, while a positive surprise could materially dent 85% market pricing of a November cut, especially since the TWI is now trading at the level forecast by the RBNZ.
Risk reward favours kiwi longs also because positioning has lightened considerably over the past fortnight, with last week’s Corax data recording the most aggressive kiwi selling in the past year.
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