24 Apr 2014
USD/NZD between 0.86-0.87 in the medium term – Rabobank
FXStreet (Edinburgh) - Jane Foley, Senior Currency Strategist at Rabobank, expects the NZD/USD to range between 0.86 and 0.87 in the next months.
Key Quotes
“A lot of good news has been priced into the RBNZ and while the consensus is still focused on a third RBNZ rate hike in June, another move so soon is not certain. Overall, we expect NZD/USD to remain mostly in the 0.86/0.87 range in the coming months, but see risk of a slightly softer NZD near-term”.
“Even though the strength of the NZ economy still stands out among other developed nations, a couple of factors have changed since the end of last year and both of these were cited by the RBNZ in last night’s policy statement. Firstly auction prices for dairy products “have fallen by 20% in recent months”. Secondly, there has been “some moderation in the housing market”. The NZ authorities have been using macro-prudential measures to contain the growth of house price inflation and household debt and in today’s statement the RBNZ reported that these are having some impact on easing the pressures in the housing market”.
“A slackening in the pace of house price gains may buy the RBNZ some time before it hikes again. The outlook for the dairy industry is also likely to be a crucial determinate in how fast the RBNZ will raise rates from here… Last night the RBNZ reported that “the high exchange rate remains a headwind to the tradables sector”. While the RBNZ looks poised to hike again this year, it is possible that the market may unwind some of its expectations for a June move. This could lead to some temporary softness in NZD/USD”.
Key Quotes
“A lot of good news has been priced into the RBNZ and while the consensus is still focused on a third RBNZ rate hike in June, another move so soon is not certain. Overall, we expect NZD/USD to remain mostly in the 0.86/0.87 range in the coming months, but see risk of a slightly softer NZD near-term”.
“Even though the strength of the NZ economy still stands out among other developed nations, a couple of factors have changed since the end of last year and both of these were cited by the RBNZ in last night’s policy statement. Firstly auction prices for dairy products “have fallen by 20% in recent months”. Secondly, there has been “some moderation in the housing market”. The NZ authorities have been using macro-prudential measures to contain the growth of house price inflation and household debt and in today’s statement the RBNZ reported that these are having some impact on easing the pressures in the housing market”.
“A slackening in the pace of house price gains may buy the RBNZ some time before it hikes again. The outlook for the dairy industry is also likely to be a crucial determinate in how fast the RBNZ will raise rates from here… Last night the RBNZ reported that “the high exchange rate remains a headwind to the tradables sector”. While the RBNZ looks poised to hike again this year, it is possible that the market may unwind some of its expectations for a June move. This could lead to some temporary softness in NZD/USD”.