NZD/USD: Potential to break above 0.7300 this week - Westpac

Imre Speizer, Senior Market Strategist at Westpac, notes that the NZD/USD is now trading at a one-year high with potential to break above 0.7300 this week.

Key Quotes

“NZ’s data calendar next week again holds little importance for markets. We have REINZ housing update for June, electronic spending (Mon), food prices (Wed), manufacturing PMI, and ANZ consumer confidence (all Thu). More closely read will be the speech from RBNZ Asst. Gov. McDermott on Wed, on how they decide the OCR, although today’s Bulletin has partly stolen the thunder.

We are moderately bullish on the USD given Friday’s payrolls data will go some way to comforting a cautious Fed. Also supportive are elevated ECB/BoE easing risks, plus political risks such as Italy’s senate reform referendum.

3 months: We target 0.67, based on a stronger US dollar and the RBNZ cutting to 2.0%. Even if the Fed doesn’t tighten this year, Brexit contagion and more general global risks should support the US dollar for safe-haven reasons.

1 year: Our economic fundamentals based forecast is 0.63.”