NZD appears supported in the medium/longer term – Danske Bank

Minna Kuusisto, Analyst at Danske Bank, sees the Kiwi Dollar supported in the longer run.

Key Quotes

“Broad-based USD weakness pulled the NZD higher in January, which may have been one of the reasons forcing the RBNZ to change its rhetoric in the February meeting”.

“We consider the central bank’s commitment to accommodative monetary policy ‘for a considerable period’ a strong signal of keeping rates unchanged over our forecast horizon”.

“We expect USD appreciation momentum to gain ground near-term as the new US administration reveals a more detailed economic plan”.

“We keep our forecast for NZD/USD unchanged as relative monetary policies and USD momentum will drive the pair lower on a 1-6M horizon. In the course of H2, we expect the RBNZ to review its current dovish stance and market speculation about a possible hike approaching in 2018 should support NZD on a 6-12M horizon”.