The Reserve Bank of New Zealand MPS caused long-end NZ-US yield spreads to rise further, supporting NZD/USD in an already bullish environment. Therefore, economists at Westpac targets the 0.7560 level.
Key quotes
“There’s minor resistance around 0.7450, but beyond that 0.7560 – the multi-year high in 2017 – is our target.”
“The RBNZ signalled that it would look beyond the current bout of economic strength and rising inflation (considered transitory), adding that it expected to maintain stimulus for a long time.”
“While short-end yields are likely to be somewhat contained, long-end yields can rise further relative to US yields, such yield spread advantage supporting NZD/USD. That, plus expected USD weakness and rising global sentiment, should see NZD/USD rise further.”
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