It seems more of an inevitability than a likelihood at this point
The kiwi is weighed lower to start the week, not helped by AUD/NZD buying on the back of the RBNZ touting the possibility of negative rates once again over the weekend.
We are now actively preparing a package of additional monetary policy tools to support the economy if required. The additional tools include negative wholesale interest rates and direct funding to banks.
To be effective, the design of the package needs to ensure our monetary policy decisions have their maximum impact on businesses and households without creating undue risk. This is why we are looking at a package of options that can best achieve this outcome.
If anything, it can be taken as a bit of a reminder that they don’t really have the best tolerance in letting the kiwi run higher, after having seen AUD/NZD slump to near 1.08 last week after testing 1.10 in the middle of August.
For this week, the pair may also be supported by large option expiries at 1.0860 (A$1.8 billion) which are due to roll off tomorrow, so keep an eye on that level with the pair also testing its 100-hour moving average (also @ 1.0860) currently.