1 Jul 2015
Bearish outlook on NZD/USD remains unchanged – BAML
FXStreet (Edinburgh) - In the view of analysts at BAML, the perspective of the pair remains tilted to the downside.
Key Quotes
“In our view, the RBNZ's proactive move and firm easing bias was aimed at keeping downward pressure on the currency”.
“This is evidenced by the June OCR statement that the currency remains overvalued and that a further significant downward adjustment is justified”.
“The easing bias indicated that the RBNZ was concerned on growth more than imbalances in the housing sector”.
“We revise down our 3Q & 4Q15 NZD/USD forecast to 0.68 and 0.67 respectively (from 0.70 and 0.68) and remain bearish on NZD for a few reasons”.
“The RBNZ's firm easing bias suggests that the NZD will remain under pressure over the following months. Economists' consensus forecast that the current account deficit (%GDP) could widen to -4.7% in 2Q16 from -3.6% in 1Q15 is consistent with a gradual path of depreciation”.
“Wage growth could be under pressure, partly driven by labor supply due to strong migration, but also the competition from Europe faced by the dairy industries”.
Key Quotes
“In our view, the RBNZ's proactive move and firm easing bias was aimed at keeping downward pressure on the currency”.
“This is evidenced by the June OCR statement that the currency remains overvalued and that a further significant downward adjustment is justified”.
“The easing bias indicated that the RBNZ was concerned on growth more than imbalances in the housing sector”.
“We revise down our 3Q & 4Q15 NZD/USD forecast to 0.68 and 0.67 respectively (from 0.70 and 0.68) and remain bearish on NZD for a few reasons”.
“The RBNZ's firm easing bias suggests that the NZD will remain under pressure over the following months. Economists' consensus forecast that the current account deficit (%GDP) could widen to -4.7% in 2Q16 from -3.6% in 1Q15 is consistent with a gradual path of depreciation”.
“Wage growth could be under pressure, partly driven by labor supply due to strong migration, but also the competition from Europe faced by the dairy industries”.