NZD/USD: high conviction trade, fade 0.6840 - Westpac

Analysts at Westpac offered a high conviction scenario for NZD.

Key Quotes:

"Sell NZD/USD into 0.6840, stop 0.6910."

"We have a mild negative bias for the week ahead, seeing scope for a move below 0.6705. Markets almost abandoned the view that the RBNZ could cut the OCR to 2.0% on 9 June, assigning it only a 15% chance earlier this week. A heated NZ housing market and some analysts flipping to an on-hold forecast largely motivated the move."

"However since the March MPS, there have been few notable developments relative to the RBNZ’s forecasts apart from NZD TWI averaging around 72.9 in Q2 - 2.8% above the 70.9 forecast. If anything, that implies the RBNZ’s interest rate projections should fall further to a sub-2.0% OCR."

"As the meeting date approaches, we would expect market pricing to start reflecting such, in turn pressuring NZD/USD lower."