NZD/USD is likely to be mainly a reflection of USD behaviour - Westpac

Imre Speizer, Research Analyst at Westpac, suggests that with the RBNZ well and truly sidelined (confirmed by last week’s OCR Review Statement) and economic news minor until the mid-April CPI release, NZD/USD is likely to be mainly a reflection of US dollar behaviour.

Key Quotes

“The latest setback there is the failure of the healthcare repeal bill - if the resultant unwind of long-USD positions persists, then NZD/USD should continue higher during the weeks ahead, into the 0.7150-0.7300 range.”

“The data calendar this week is light and minor: building permits and ANZ’s business confidence survey (both on Friday). The latter holds some interest for markets, both for its headline confidence reading and its inflation expectations components.”

“3 months ahead: Against a backdrop of large oscillations in NZD/USD during the past six months, we err on the side of negativity for the next few months. Our main rationale remains our expectation the US dollar will resume its trend higher amid a tighter Fed and stronger US economy. We target 0.6900.”