NZD: Potential for higher in the near term - Westpac

Imre Speizer, Research Analyst at Westpac, suggests that the sharp rebound in global sentiment since the Brexit vote shock has boosted NZD to a one-year high, with potential for higher in the near term.

Key Quotes

“The next major target above is 0.7420 (April 2015 lows).

CPI next week will be important for market pricing of the RBNZ’s August meeting, currently at only 40% chance of a cut. A sub-0.5% CPI (qoq) would surely boost the chances, given the NZD TWI is 8% above RBNZ forecasts, and depress the NZD briefly.

Further out, global uncertainty combined with the RBNZ’s easy stance should act as headwinds. We see NZD/USD closer to 0.6800 by year end. The main risk to our view is that yield-hungry inflows will accelerate after further easing from the BOE, ECB and BOJ.”