The NZD/USD pair is poised to test 0.7230, a break then targeting 0.7270, if risk sentiment remains elevated, economists at Westpac report.
NZD/USD should rise to 0.76 by year-end
“Having broken above the key 0.7100 level last week, NZD/USD is poised to continue higher. First clearing 0.7230, and then 0.7270, to allow a move to 0.7300+. The main drivers recently have been stronger global risk sentiment and a weaker US dollar.
“Multi-month, we remain bullish NZD/USD, expecting 0.7600 by year-end. The main factors are likely to be a weaker US dollar (due to improving global growth relative to the US) and upbeat global risk sentiment.”
“NZ CPI data was not as dramatic as some market participants had hoped. The headline measure was as expected at 0.8% QoQ and 1.5% YoY. Moreover, core measures were slightly more subdued than expected. Nontradables is a good indication of domestically-sourced inflation, and is closely watched by the RBNZ. It fell further to 2.1% YoY, which is below long-run averages. It will provide some comfort to the RBNZ’s long-time on-hold stance, ahead of a transitory spike in Q2 and Q3.”
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