NZD/USD: No signs of a near term breakout - Westpac

NZD/USD has been stuck in a sideways range of 0.6690-0.6860 in July, and shows no sign of a near term breakout, according to Imre Speizer, Head of NZ Market Strategy at Westpac.

Key Quotes

“There does remain potential for a corrective bounce to the 0.70 area, given speculator positioning (CFTC) is the third shortest on record.”

“In addition, inflation, notably nontradables, is rising. Against that, NZ economic growth is slowing, and it is the latter theme which is likely to influence the NZD over the medium term.”

“We this remain bearish medium term, and expect 0.6700 to break. In addition to the slowing NZ economy, a stronger USD and unattractive NZ-US yield spreads should all help to push NZD/USD lower this year.”