AUD/NZD to continue its march downward – ING

The NZD/USD outperformed its closest peer AUD (as well as most other G10 currencies) last week and after a short-lived rally, AUD/NZD has now dropped to 1.0350. AUD/NZD has more downside potential, in the opinion of economists at ING.

A significant NZ GDP drop might derail expectations about RBNZ tightening

“We continue to see downside risks to the AUD/NZD pair on monetary policy and economic divergence.”

“We think that markets saw some opportunity to buy the dips in NZD at a moment New Zealand exited the nation-wide lockdown and with the very likely first rate hike by the RBNZ (on 06 October) drawing nearer.”

“In the week ahead, 2Q GDP data in New Zealand will be the main highlight: we should see a moderate slowdown in QoQ growth, but only a significant drop might derail fully-cemented expectations about RBNZ tightening.”