NZD/USD: The 0.70 level is the next stop – Westpac

A stream of positive NZ economic news, especially on housing, plus a less pessimistic Reserve Bank of New Zealand’s (RBNZ) stance, add to the supportive global sentiment. The NZD/USD pair is set to target the 0.70 level, economists at Westpac apprise. 

Key quotes

“NZD/USD momentum remains positive, the next major technical target being 0.7000. Beyond that, though, it will start looking technically stretched.” 

“Global sentiment remains elevated, supporting most risk-sensitive currencies relative to the US dollar but the NZD has also outperformed other majors, suggesting NZ’s economic resilience through covid has been a factor. Another, more recent factor, has been the less pessimistic stance of the RBNZ at last week’s MPS, which in turn caused markets to abandon expectations for OCR cuts.” 

“We continue to expect OCR cuts, from April 2021 onwards, but any hints from the RBNZ on that front are unlikely to appear before February. That means the NZD could remain elevated until then.”