Westpac Research Notes:
NZD/USD 1 day: A sharp reversal upwards, mainly driven by the weak US dollar overnight, argues for this corrective bounce extending to 0.7525 today.
NZD/USD 1-3 month: Multi-month, we expect the US dollar uptrend to resume with strong US data in Q2 and Q3 and therefore expect NZD/USD to fall, the next major target being 0.7120. Apart from the US dollar story there are negative local factors to watch out for, particularly low inflation during much of 2015, plus the RBNZ's conditional easing bias. One of its conditions - softer wage inflation - has arguably already been met, while inflation expectations are softening too. That leaves domestic demand activity (which remains robust) to be ticked before the RBNZ can contemplate easing.
