NZD/USD: Negative bias for the week ahead - Westpac

Imre Speizer, Research Analyst at Westpac, adopts a negative bias for NZD/USD for the week ahead as the effects of the dovish RBNZ MPS surprise could linger, taking NZD/USD towards 0.6750 - the bottom of a multi-month channel.

Key Quotes

“However it’s hard to get too bearish given NZ’s strong fundamental backing, extreme short positioning, and weakening US dollar.”

“The NZ event calendar backs off in intensity this week, the annual Budget the focus the following week. Second tier data includes REINZ housing (for any signs of further slowing in price growth) Q1 retail sales volume, ANZ consumer confidence, and migration. There’s also the second of May’s GDT dairy auctions, futures pricing a 2% fall in prices.”

“Three months ahead: Multi-month we see potential for the NZD’s ragged decline since September to resume and extend below 0.6800, driven mostly by the resumption of a stronger US dollar. A stronger US economy, rising US interest rates and a strong US dollar are themes which should eventually reappear this year.”