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Analysts at Citibank, forecast the NZD/USD pair at 0.68 in a 0-3 month period and at 0.69 in 6-12M. In the short-term, they see the Federal Reserve will likely cut rates but if it is not so dovish as expected, it may favor a rebound in the USD and limit NZD performance.  

Key Quotes:

“Our feeling is that the RBNZ may continue to be a policy follower (i.e. if other G10 central banks turn even more dovish they may too) with a vested interest in keeping the NZD at competitive levels. Our forecasts is there NZD more or less flat.”

“We lowered our GDP forecast in New Zealand by 0.2pp to 1.8% as slower consumer spending and its 5% above unemployment rate.”

!Dairy product prices rose 2.7% at the latest Global Dairy Trade auction, first rebound since 21 May. The price of diary products rise which may favor NZD.”

“The Fed may cut rate by 25bp but the market probably fully priced in already. If the Fed is not dovish enough as expected which may lead USD rebound and limit NZD performance.”

“NZD/USD stays at short-term uptrend channel, 55d MA which is at around 0.6615 seen as pivot. In short term, NZD may trade between 0.6615-0.6784, with next support at 0.6568.”