25 Mar 2014
NZD/USD bias remains towards further upside - Wesptac
FXStreet (Bali) - Imre Speizer, FX Strategist at Westpac, expects the NZD/USD outlook to be sideways this week, within the broader context of an uptrend still firmly in place.
Key Quotes
"The bias remains towards further upside for the NZD given that the RBNZ has started what will become an aggressive rate tightening cycle and economic data remains strong. Last week’s GDP report confirmed that the New Zealand economy gathered a good head of steam at the end of last year. GDP grew 0.9% in the December quarter – slower than the 1.2% growth seen in the September quarter, but a fairer reflection of the economy’s underlying trend. Overall, there was nothing in the GDP numbers to challenge our view that the economy will grow at a roughly 4% annual pace over 2014. That would make 2014 the best year for the New Zealand economy – in growth terms – since 2004."
"Risk sentiment improved through the latter stages of last week. While the situation in Ukraine needs to be watched closely, markets have weathered this storm well. Volatility in Chinese financial markets has had limited spillover into wider risk sentiment. While last week’s FOMC outcome sent US yields higher, 10yr yields remain in a broad 2.6/2.8 range with little signs of an imminent breakout. So the topside remains the most vulnerable for the NZD this week. However, it needs to be noted that the US$ did find decent support last week and the weekly ‘doji’ chart pattern in NZD/USD is a warning that we could see a reversal here. Were NZD to close this week around 0.8450 or below, this chart pattern would become an ‘evening star’ which would suggest a major high is in place."
Key Quotes
"The bias remains towards further upside for the NZD given that the RBNZ has started what will become an aggressive rate tightening cycle and economic data remains strong. Last week’s GDP report confirmed that the New Zealand economy gathered a good head of steam at the end of last year. GDP grew 0.9% in the December quarter – slower than the 1.2% growth seen in the September quarter, but a fairer reflection of the economy’s underlying trend. Overall, there was nothing in the GDP numbers to challenge our view that the economy will grow at a roughly 4% annual pace over 2014. That would make 2014 the best year for the New Zealand economy – in growth terms – since 2004."
"Risk sentiment improved through the latter stages of last week. While the situation in Ukraine needs to be watched closely, markets have weathered this storm well. Volatility in Chinese financial markets has had limited spillover into wider risk sentiment. While last week’s FOMC outcome sent US yields higher, 10yr yields remain in a broad 2.6/2.8 range with little signs of an imminent breakout. So the topside remains the most vulnerable for the NZD this week. However, it needs to be noted that the US$ did find decent support last week and the weekly ‘doji’ chart pattern in NZD/USD is a warning that we could see a reversal here. Were NZD to close this week around 0.8450 or below, this chart pattern would become an ‘evening star’ which would suggest a major high is in place."