NZD/USD Fall to Extend to the 0.6650 Area - Westpac
Imre Speizer, Senior Market Strategist at Westpac, notes that the
stronger US dollar has resulted in a 3% fall in NZD/USD so far this
month.
Key Quotes
“We expect that to extend this week, to the 0.6650 area, mainly due to
some USD-supportive news expected in the US from CPI data and the FOMC
minutes. This week’s NZ calendar is busy, and includes the important
inflation expectations survey conducted by the RBNZ (Tue). Any surprises
here will influence the June MPS decision on 9 June. Other data of note
are Q2 PPI (Wed), ANZ consumer confidence (Thu) and migration (Fri).
There’s also a GDT dairy auction on Tue.
3 months: We retain our long-held view that NZD/USD
will decline this year, but we have raised our Q3 target to 0.65. The
basis for our view remains a combination of a looser RBNZ and a tighter
Fed. That view has so far been hurt by a Q1 soft patch for the US
economy, as well as a surprisingly cautious Fed. We expect the former to
show an improvement in Q2, and the latter to hike once this year (in
September). If these play out as expected, NZD/USD should decline. A
major risk to our view is the Fed behaves in a more hesitant manner than
expected.
1 year: Our economic fundamentals based forecast is 0.62.”
