1 Dec 2014
NZD/USD Outlook - Westpac
FXStreet (Guatemala) - Imre Speizer, analysts at Westpac Banking Corporation ABN his outlook for the NZD on a forward outlook.
Key Quotes:
“The past two weeks have seen NZD/USD rangebound with a slight downward drift. The forces shaping this result have been continuing good NZ economic news (retail spending, housing market, employment), offset by good US economic news (retail spending, GDP, employment)”.
“This week may see more of this ranging. NZ economic data has downside risks, but so too does the US data. NZ terms of trade (Mon) will fall, and the semi-monthly dairy auction (Wed) will be watched for signs of a bottom. US data (ISM surveys, payrolls) may be cold-weather affected and thus disappoint. That leaves us with a neutral bias for the week ahead”.
“Over the medium term, there remains potential for it to fall to 0.7500 by February. The USD uptrend remains strong as the Fed approaches policy liftoff. NZ dairy prices are expect to fall further while global supply remain high”.
“Moreover, Q4 inflation is expected to remain at 1.0% yoy, which is at the bottom of the RBNZ’s 1%-3% target band, keeping the RBNZ on hold for at least the year ahead (the market is pricing no more hikes until Jan 2016), which means the NZ-US interest rate differential is vulnerable to falling further”.
“By late 2015, the exchange rate should stage a rebound to the low 0.80’s if NZ’s commodity prices rise in line with global demand and lower supply. This, plus positive risk sentiment, should offset any interest rate disadvantage resulting from the long-awaited Fed tightening”.
Key Quotes:
“The past two weeks have seen NZD/USD rangebound with a slight downward drift. The forces shaping this result have been continuing good NZ economic news (retail spending, housing market, employment), offset by good US economic news (retail spending, GDP, employment)”.
“This week may see more of this ranging. NZ economic data has downside risks, but so too does the US data. NZ terms of trade (Mon) will fall, and the semi-monthly dairy auction (Wed) will be watched for signs of a bottom. US data (ISM surveys, payrolls) may be cold-weather affected and thus disappoint. That leaves us with a neutral bias for the week ahead”.
“Over the medium term, there remains potential for it to fall to 0.7500 by February. The USD uptrend remains strong as the Fed approaches policy liftoff. NZ dairy prices are expect to fall further while global supply remain high”.
“Moreover, Q4 inflation is expected to remain at 1.0% yoy, which is at the bottom of the RBNZ’s 1%-3% target band, keeping the RBNZ on hold for at least the year ahead (the market is pricing no more hikes until Jan 2016), which means the NZ-US interest rate differential is vulnerable to falling further”.
“By late 2015, the exchange rate should stage a rebound to the low 0.80’s if NZ’s commodity prices rise in line with global demand and lower supply. This, plus positive risk sentiment, should offset any interest rate disadvantage resulting from the long-awaited Fed tightening”.