24 Jul 2014
NZD/USD: year-end target at 0.85 - Scotiabank
FXStreet (Córdoba) - Camilla Sutton, analyst at Scotiabank notes that the RBNZ used much stronger language than before, adding pressure on the NZD after the meeting. Scotiabank holds their NZD/USD year-end target at 0.85 and warns cautious when it trades above 0.86.
“NZD is weak, having fallen 1.3% since yesterday’s NA close and touching a one month low”.
“As expected the RBNZ increased interest rates by 25 bps to 3.50%; while signaling a pause in its tightening cycle, downgrading its growth forecast to 3.7% in 2014 and rising concern over the level of NZD”.
“In its warning over the currency, the RBNZ said explicitly that ‘the level of the New Zealand dollar is unjustified and unsustainable and there is potential for a significant fall’. This is much stronger language than has been used recently and added to the downward pressure on NZD”.
“We hold a year-end target of 0.85, expecting markets to grow increasingly cautious over NZD when it trades above 0.86”.
“NZD is weak, having fallen 1.3% since yesterday’s NA close and touching a one month low”.
“As expected the RBNZ increased interest rates by 25 bps to 3.50%; while signaling a pause in its tightening cycle, downgrading its growth forecast to 3.7% in 2014 and rising concern over the level of NZD”.
“In its warning over the currency, the RBNZ said explicitly that ‘the level of the New Zealand dollar is unjustified and unsustainable and there is potential for a significant fall’. This is much stronger language than has been used recently and added to the downward pressure on NZD”.
“We hold a year-end target of 0.85, expecting markets to grow increasingly cautious over NZD when it trades above 0.86”.