07:32 AM EDT, 08/09/2024 (MT Newswires) -- UBS said it expects the Reserve Bank of New Zealand (RBNZ) to cut

the cash rate by 25bps to 5.25% at next Wednesday's policy meeting, with the Monetary Policy Statement likely to revise its forecasts to be consistent with further easing this year and next.

While New Zealand jobs data was better than expected -- the unemployment rate up to 4.6% versus 4.7% consensus -- the bank highlights business activity data and hiring surveys all point toward upside risks to the RBNZ's unemployment forecast of 5.1%.

In fact, the unemployment rate has now risen by a full 1% y/y and is up 1.4% from its trough.

In other data, the RBNZ's latest survey of inflation expectations revealed the belief that the inflation rate in two years from now will be below the average seen since 2002, pointed out UBS. Survey respondents also expect inflation to drop back within the RBNZ's target band of 1%-3% this quarter.

As such, the bank likes to be long the AUDNZD at 1.09 or below with a target of 1.15 over six to 12 months.