NZD/USD: Upside risks - Westpac

Following a 7% fall since August, NZD/USD rebounded 2% last week, mostly reflecting a 2% fall in the US dollar index last week and for the week ahead, the USD could fall even further, posing upside risks for NZD/USD, according to Imre Speizer, Research Analyst at Westpac.

Key Quotes

“Regarding local factors, we have NZ CPI, which we expect to register a temporary spike and thus pose upside risks for the NZD. Same goes for the GDT dairy auction (2% gain in WMP priced by futures). In addition, there’s the government formation announcement, which poses two-way risks.”

“Three months ahead: Our medium term outlook for NZD/USD is largely dependent on the outlook for the US dollar. A persistent rebound in the US dollar by year end is needed to pull NZD/ USD back to the 0.70 area.”