Time for a kiwi revival

New Zealand economic data in recent weeks was almost uniformly better than expected, which has seen the market start to price in some probability of a hike in rates by the end of the year. This is a significant change, as for most of 2006 the interest rate market has been priced for the commencement of an easing cycle. Looking at the yields further out the curve that we have pointed to as giving the best guide to movements in the NZD, the 3-year swap rate has moved from under 6.5% in March to

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