NZD/USD to continue its gradual drift lower in longer term – Danske Bank

Minna Kuusisto, Analyst at Danske Bank, notes that led by the USD developments, NZD sank to a six-month low in December but in January, the cross has recovered more than 2%.

Key Quotes

“In the short term, we see broader USD developments and market expectations of changes in US economic policy and growth as key to the pair. In the longer term, we expect NZD/USD to continue its gradual drift lower. Even though the markets could speculate on the RBNZ hiking rates towards year-end, we still see relative monetary policies supporting the USD in the short term.”

“We keep our forecast unchanged and expect the NZD to bottom in 3-6M before heading slightly higher towards the year-end. Our 6M forecast is 0.68 and 12Mtarget0.70.”