NZD/USD fall to extend to the 0.6650 area - Westpac

Imre Speizer, Senior Market Strategist at Westpac, notes that the stronger US dollar has resulted in a 3% fall in NZD/USD so far this month.

Key Quotes

“We expect that to extend this week, to the 0.6650 area, mainly due to some USD-supportive news expected in the US from CPI data and the FOMC minutes. This week’s NZ calendar is busy, and includes the important inflation expectations survey conducted by the RBNZ (Tue). Any surprises here will influence the June MPS decision on 9 June. Other data of note are Q2 PPI (Wed), ANZ consumer confidence (Thu) and migration (Fri). There’s also a GDT dairy auction on Tue.

3 months: We retain our long-held view that NZD/USD will decline this year, but we have raised our Q3 target to 0.65. The basis for our view remains a combination of a looser RBNZ and a tighter Fed. That view has so far been hurt by a Q1 soft patch for the US economy, as well as a surprisingly cautious Fed. We expect the former to show an improvement in Q2, and the latter to hike once this year (in September). If these play out as expected, NZD/USD should decline. A major risk to our view is the Fed behaves in a more hesitant manner than expected.

1 year: Our economic fundamentals based forecast is 0.62.”