3 Jun 2013
Flash: New Zealand strategy profile – Westpac
FXstreet.com (Barcelona) - According to Global FX Strategist Sean Callow at Westpac, “A near empty local calendar keeps the focus off shore, where the USD should be firm enough to cap NZD/USD rallies in the mid-0.8100s – indeed a spec market still trimming longs opens up a run towards 0.7800.”
Meanwhile, in the-near term, the NZ curve will continue to be driven by off shore factors, steepening in line with the US. However, “in the medium-term, with the RBNZ maintaining a tightening bias, we expect the trend will flip into a bear flattener.” Callow warns.
In terms of NZ swaps, the key to long-end NZ interest rates will continue to be the US Federal Reserve, with every one basis point movement in US 10yr swap rates resulting in a 0.9bp movement in the NZ equivalent. “In the near-term, we will wait for a further rise in 10yr NZ swap rates before beginning to receive towards 4.25%, targeting a pull back to 4.0%.” Callow adds.
Meanwhile, in the-near term, the NZ curve will continue to be driven by off shore factors, steepening in line with the US. However, “in the medium-term, with the RBNZ maintaining a tightening bias, we expect the trend will flip into a bear flattener.” Callow warns.
In terms of NZ swaps, the key to long-end NZ interest rates will continue to be the US Federal Reserve, with every one basis point movement in US 10yr swap rates resulting in a 0.9bp movement in the NZ equivalent. “In the near-term, we will wait for a further rise in 10yr NZ swap rates before beginning to receive towards 4.25%, targeting a pull back to 4.0%.” Callow adds.