20 Jan 2014
Flash: NZD/USD outlook down this week - Westpac
FXstreet.com (Bali) - Weak NZ inflation and housing data plus broad US dollar strength should hurt NZD/USD this week, notes Imre Speizer, FX Strategist at Westpac.
Key Quotes
"NZ’s Q4 CPI release may alarm some with its low headline quarterly rate, although familiar observers will note Q4 is seasonally weak."
"Similarly, a fall in the pace of house sales may cause a rethink regarding the expected date of the first RBNZ rate hike."
"We expect housing weakness to be temporary and not dissuade the RBNZ from proceeding."
"Still, NZD markets may take a negative view of the above and sell NZD/USD, particularly against a backdrop of US dollar strength."
"The 0.8400 area last week provided a formidable obstacle, unlikely to be broken in the near term. Rather it should provide the launching pad for a multi-day period of NZD selling, down to 0.8165 and possibly 0.8110."
"Looking further ahead, though, by mid-2014 NZ’s strong fundamentals should be even more evident, increasing interest rate differentials taking NZD/USD towards 0.8600. The main risk to this outlook is that US fundamentals exceed our expectations, causing the US dollar to outperform instead."
Key Quotes
"NZ’s Q4 CPI release may alarm some with its low headline quarterly rate, although familiar observers will note Q4 is seasonally weak."
"Similarly, a fall in the pace of house sales may cause a rethink regarding the expected date of the first RBNZ rate hike."
"We expect housing weakness to be temporary and not dissuade the RBNZ from proceeding."
"Still, NZD markets may take a negative view of the above and sell NZD/USD, particularly against a backdrop of US dollar strength."
"The 0.8400 area last week provided a formidable obstacle, unlikely to be broken in the near term. Rather it should provide the launching pad for a multi-day period of NZD selling, down to 0.8165 and possibly 0.8110."
"Looking further ahead, though, by mid-2014 NZ’s strong fundamentals should be even more evident, increasing interest rate differentials taking NZD/USD towards 0.8600. The main risk to this outlook is that US fundamentals exceed our expectations, causing the US dollar to outperform instead."