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NZD/USD has been stuck in a sideways range of 0.6690-0.6860 in July, and shows no sign of a near term breakout, according to Imre Speizer, Head of NZ Market Strategy at Westpac.

Key Quotes

“There does remain potential for a corrective bounce to the 0.70 area, given speculator positioning (CFTC) is the third shortest on record.”

“In addition, inflation, notably nontradables, is rising. Against that, NZ economic growth is slowing, and it is the latter theme which is likely to influence the NZD over the medium term.”

“We this remain bearish medium term, and expect 0.6700 to break. In addition to the slowing NZ economy, a stronger USD and unattractive NZ-US yield spreads should all help to push NZD/USD lower this year.”