NZD/USD: Kiwi is emerging as an attractive option in August – ING

NZD is dropping in line with other pro-cyclical currencies after the US credit downgrade. Nonetheless, economists at ING expect the NZD/USD pair to recover in the coming weeks.

NZD/USD to reach 0.63 by the autumn 

We think the Kiwi has now priced in much of the negative news (China growth repricing, RBNZ pause) and is emerging as an attractive option in August should a stable risk environment and subdued FX volatility favour carry trades and recovery in undervalued currencies. 

We still expect a recovery to 0.63 in NZD/USD by the autumn.