NZD/USD: Potential to reach 0.7375 - Westpac

NZD/USD’s six-week old rally resumed last week, helped by stabilising oil prices and a weaker US dollar and for the week ahead Imre Speizer, Research Analyst at Westpac sees potential to reach 0.7375 – the Feb peak.

Key Quotes

“The falling US dollar is the main reason we are bullish NZD/USD over a one month horizon, but we caution beyond that. Speculative futures positioning is getting elevated and will soon start ringing alarm bells. Moreover, Q2 CPI, published on 18 July, is expected to pull back from 2.2% to the high 1’s.”

“Longer term, we expect to see NZD/USD lower at 0.68, as long as the Fed sticks with its hike path which would see NZ-US interest rate spreads close to zero.”