2 Dec 2013
Flash: NZD/USD seen circa 0.86 early 2014 - Westpac
FXstreet.com (Barcelona) - Despite NZD/USD should continue to trade heavy in the short run, strong NZ fundamentals and RBNZ tightening should take NZD/USD towards 0.8600 by early 2014, notes Imre Speizer, FX Strategist at Westpac.
Key Quotes
NZ fundamentals continue to shine, witness the surge in the momentum of NZ economic data during the past few months. NZ interest rates have followed suit, as the chart shows, but NZD/USD has not followed NZ interest rates. The failure of NZD/USD to follow NZ-US interest rate spreads is unusual, and points to a market focus on the US dollar as one explanation.
The preoccupation with the timing of Fed tapering has resulted in the US dollar outperforming all currencies (apart from GBP) since late October. This sentiment should keep NZD/USD capped by 0.8200 during the week ahead, with the main risk being a break below 0.8085. By early 2014, though, strong NZ fundamentals and RBNZ tightening should take NZD/USD towards 0.8600."
Key Quotes
NZ fundamentals continue to shine, witness the surge in the momentum of NZ economic data during the past few months. NZ interest rates have followed suit, as the chart shows, but NZD/USD has not followed NZ interest rates. The failure of NZD/USD to follow NZ-US interest rate spreads is unusual, and points to a market focus on the US dollar as one explanation.
The preoccupation with the timing of Fed tapering has resulted in the US dollar outperforming all currencies (apart from GBP) since late October. This sentiment should keep NZD/USD capped by 0.8200 during the week ahead, with the main risk being a break below 0.8085. By early 2014, though, strong NZ fundamentals and RBNZ tightening should take NZD/USD towards 0.8600."