Analysts at MUFG bank note that external factors are supporting the New Zealand dollar and Swedish krona more ahead of the Reserve Bank of New Zealand (RBNZ) and Riksbank meetings. KEY QUOTES: „The NZD has recently benefited from an easing of global hawkish fears and a relatively irrational reassessment of RBNZ rate expectations.” „The NZD and the Swedish krona should continue to benefit from the recent global improvement in investor risk sentiment. The Swedish krona would benefit more if the central bank also announced that interest rates had increased well above 2.50%. „RBNZ (Cf ) and Riksbank ( Thursday) are the latest G10 central banks to update their monetary policy in the coming week. The RBNZ is expected to raise interest rates for the sixth time in a row by 50 basis points, bringing the base rate to .00%. Market participants estimate a roughly 0% chance the RBNZ could deliver an even bigger 75 basis point hike in the third quarter amid much stronger inflation and wage growth. The RBNZ’s next policy meeting is not until February 22, which could prompt the RBNZ to make a bigger, pre-load hike next week. The Riksbank has lagged behind other G10 central banks in policy tightening and is now catching up after a 100 basis point increase in September. The Riksbank expects to increase by 75 bps on Thursday, while another increase of 100 bps cannot be ruled out.

Steve Walker

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