NZD/USD to appreciate slightly over 2022 towards 0.70 – ANZ

NZD/USD has recently been boosted by the pullback in the USD. Analysts at ANZ Bank expect the NZD to appreciate gradually, but there are risks in both directions. 

Volatility to prevail as global central banks shift to tightening mode

 “Our forecasts assume that the NZD/USD appreciates slightly over 2022, eventually topping out at 0.70.”

“On the bright side, we have factors like: Interest rate differentials to other countries suggest the NZD has scope to appreciate. Commodity prices also tend to be influential, and these are rising right now. Growth is also looking robust – but that’s not unique to New Zealand.”

“The kiwi tends to trade as a proxy for global risk of various kinds. Rising tensions in Eastern Europe weighed on sentiment in mid-February. If the situation were to deteriorate, we may see a ‘flight to safety’, which would likely be to the detriment of the NZD.”

“Volatility is low now but it could rise as we inch closer to the first US Federal Reserve’s first rate hike, expected next month. It also remains to be seen how currency markets respond to the cessation of QE in the US next month. The risk is that bond markets don’t take it well.”