OCBC strategists Sim Moh Siong Christopher Wong highlight that the New Zealand Dollar (NZD) fell after the Reserve Bank of New Zealand (RBNZ) unexpectedly held the OCR at 2.75%. Policymakers still signal tighter policy ahead, with two further hikes expected in December and 1Q27. This stance should cap further NZD downside, with 0.5600 flagged as the key near-term level for NZD/USD after the sell-off.

RBNZ pause but still hawkish

“The NZD sold off sharply after the Reserve Bank of New Zealand October Monetary Policy Review unexpectedly voted 4-3 to hold the OCR at 2.75%, defying widespread expectations for a 25bp hike.”

“Notably, Governor Anna Breman voted with the majority to hold, while Chief Economist Paul Conway backed a hike. The majority preferred to give the July and September rate increases more time to work through the economy, particularly with domestic demand still subdued.”

“Still, the decision was more of a pause than a dovish pivot. The RBNZ said tighter monetary policy is likely to be required, although the timing remains data-dependent. Attention now shifts to December.”

“We continue to expect two further hikes, in December and 1Q27, which should limit further NZD downside. For NZD/USD, 0.5600 remains the key near-term level to watch after being tested around the decision.”