NZD/USD: Potential to rise further towards the 0.6900-0.6940 - Westpac

Imre Speizer, analyst at Westpac, explains that the NZD/USD pair has rebounded last week as the US dollar fell and there’s potential for it to rise further towards the 0.6900-0.6940 area if the US dollar remains subdued.

Key Quotes

“NZ data next Wed and Thu should be NZD negative on the day, and possibly beyond if markets think it’s enough to cause a shift in RBNZ stance.”

“OIS markets are pricing a 90% chance of an RBNZ rate cut by March 2020, and a major GDP disappointment should see a cut fully priced.”

“Aside from the above negatives, NZD/USD looks fairly priced, according to our yield and commodity based model. And CFTC speculative positioning has flipped from extremely short to neutral.”

“So our multi-month forecast of 0.66 requires fair value to shift lower, via a fall in NZ-US yield spreads.”