MUFG Research previews tonight's October RBNZ meeting.

"First up in the schedule of G10 central bank announcements this week is the RBNZ which will announce later tonight, and the rates market is nearly fully priced for a 25bp hike. NZD is the third best performing G10 currency this month and a hawkish hike is what is required for that currency performance to continue – three rate hikes in total are priced by March so strong guidance supporting that pricing is required," MUFG notes.

"We expect the RBNZ to deliver tonight but ultimately under-deliver what is priced. We expect only one further hike to 3.25% – the market pricing implies 3.5 additional hikes after tonight’s. Q3 inflation was a little weaker than expected and that likely highlights the level of spare capacity in the New Zealand economy that won’t require what market pricing implies. The unemployment rate jumped to 5.6% in Q2, the highest level since Q3 2015. Risks are skewed to the downside for NZD and even if the RBNZ does deliver a hawkish hike, investors will at some point likely question the extent of hikes priced. We expect NZD to underperform over the forecast period ahead," MUFG adds.