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Strong recovery for the NZD off lows in mid-March has reached a point of consolidation, with gains for now capped well-below peaks of last July of around 0.6790. The kiwi is trading above the 0.66 level and Patrick Bennett from CIBC Capital Markets expects the pair to trade at 0.67 by year-end.

Key quotes

“NZD gains have owed to lifts in broad global risk appetite underpinned by policy support, and a weaker USD environment. But unlike the AUD, NZD has had less support from the still cautious RBNZ. That has resulted in some underperformance of NZD vs AUD.”

“We have revised our NZD forecasts higher but retain a degree of caution in not extrapolating gains from present levels. The economic recovery is in its early stage but is complicated by the closure of borders and removal of income from tourism and education. Like Australia, and elsewhere, domestic tourism is on the rise, but cannot fully bridge the gap. Reports of businesses closing and unemployment set to remain high for some time underline economic challenges.”