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Analysts at MUFG Bank, see the NZD/USD pair trading in the 0.61/0.66 range during the fourth quarter and  0.62/0.67 over the second quarter of next year.  

Key Quotes:

“The kiwi looked like it was going to break the downward trend in place against the US dollar since mid-July but concerns over global growth and a less dovish US Fed saw the kiwi reverse its earlier gains. It ended the month as the 2nd worst performing G10 currency and close to levels last seen in 2015. With division among the FOMC and a continued US-China trade stalemate, these external factors will likely keep pressure on the kiwi.”

“Incoming macroeconomic data has also been poor. Q2 GDP grew at the slowest pace in five years. Manufacturing and construction activity shrank during Q2 and Y/y home sales were down 6.1%. Sentiment has fallen sharply, with consumer confidence down to the lowest since 2015 and business confidence at the lowest since 2008. Clearly the broader economy has not shared RBNZ Governor Orr’s satisfaction at the outcome of their 50bps cut in August. While they did not cut again in September, the RBNZ clearly have an easing bias and markets are almost fully pricing in another 25bps cut in November. The RBNZ did however pare back expectations for any unconventional monetary policy, when Governor Orr indicated it was unlikely to be needed and which lifted the kiwi temporarily. The lagged impact of the 50bps cut may yet yield more positive data which could support the kiwi.”

“Our yield-differential model suggests the kiwi is currently undervalued against the US dollar suggesting some upside pressure in future. With US dollar strength seen to be peaking over the coming quarters, the kiwi should gradually strengthen further out.”