NZD/USD to regain ground towards the 0.72 level – CIBC

The New Zealand dollar has been amongst the strongest major currencies since August 18, and economists at CIBC Capital Markets anticipate it to remain so as expectations of RBNZ hikes provides support.

RBNZ to deliver a rate hike next week

“The covid lockdowns are being relaxed and case numbers suggest that process will continue. As a result, the hit to 3Q activity, while not insignificant, should be swiftly recovered.”

“Support for NZD/USD is seen firm down to 0.68 and we expect any weakness to be contained ahead of there.” 

“There is a question of either a 25 or 50bps hike at the meeting on October 6th, though regardless, a hawkish message will prevail. We anticipate NZD/USD regaining ground, potentially toward 0.72.”

“We expect NZD outperformance over coming months on widening interest rate differentials versus both EUR and AUD.”