NZD/USD: Bounce towards the 0.7000 area is expected - Westpac

Imre Speizer, Research Analyst at Westpac, explains that the US dollar remains on the back foot, and geopolitical tensions have relaxed slightly, preventing NZD/USD from falling out of bed despite the anti-trade posture of the Trump Administration.

Key Quotes

“Also helping this week should be higher dairy prices, decent labour data, extremely short speculative NZD positioning, and market expectations of an upbeat tone at the following week’s RBNZ MPS. A bounce towards the 0.7000 area is expected.”

“The NZ data calendar highlight is the Q1 labour data (Wed). We expect solid employment growth; but the unemployment rate should remain stuck at 5.1% with increasing participation. The GDT dairy auction on Tue is predicted by futures to result in another moderate rise.”

“Three months ahead: Multi-month we see potential for the NZD’s ragged decline since September to extend below 0.6800, driven mostly by the resumption of a stronger US dollar. A stronger US economy, rising US interest rates and a strong US dollar are themes which should eventually reappear this year."