NZD/USD risks a test of 0.68 in 6-12 months – Danske Bank

Senior Economist at Danske Bank Vladimir Miklashevsky sees the Kiwi Dollar testing the 0.6800 area vs. the greenback in the medium-to-long term.

Key Quotes

“While a weakened USD pulled NZD/USD higher in March, the RBNZ clarified its dovish tone on the NZD, i.e. the central bank is seeking a lower kiwi. We consider the central bank’s commitment to accommodative monetary policy ‘for a considerable period’ to be a strong signal it will keep rates unchanged over our forecast horizon”.

“As the Fed is expected to be less hawkish, hiking twice in 2017, NZD weakness would be supported further by the RBNZ in our view. In the course of H2, we expect the RBNZ to review its current dovish stance and market speculation about a possible hike in 2018 should support NZD on a 6-12M horizon”.

“We look for NZD/USD to be edge gradually lower, settling around the 0.68 level in 6-12M”.