NZD/USD momentum remains firmly downward – Westpac

According to Imre Speizer, analyst at Westpac, NZD/USD momentum remains firmly downward, targeting a break below 0.6380 during the week ahead and below that there’s some support at 0.6350, but below that there’s clean air until around 0.6200.

Key Quotes

“The surprising 50bp cut from the RBNZ yesterday has caused markets to reassess the RBNZ’s reaction function, such that lower terminal rates are likely to be priced in (currently 0.67%). In addition, QE chatter will intensify.”

“We expect another OCR cut in November, to 0.75%, followed by a period on hold. The risks to the on-hold view are to the downside.”

“On top of that, there’s the more measured easing approach from the Fed which should cause NZUS yield spreads to fall. In addition, a prolonged US-China trade war will benefit the USD and hurt the NZD.”