The international factors of US influenced the recent trade rallies and in particularly changing expectations of when and by how much interest rate could be hiked by the US Fed. Domestically economic data have been mixed of late and not particularly supportive of the NZD.
But the NZD is around 1.5% higher than a month ago against the USD, still well below its level at the beginning of 2015. There has been an increased probability that the Reserve bank of New Zealand will move to an easing bias at its next policy meeting on April 29th due to the economy still seems to be growing at a decent pace and in addition annual CPI inflation fell further in Q1 to only 0.2%.
We understand the combination of a more dovish RBNZ stance and the likelihood of US rate hikes later this year will push the NZD/USD lower. Equities were higher by over 1 percent in the Dow, WTI remained above $57 per barrel, and the USD remained on the front foot against a major hard currencies. However, the global atmosphere could get shaken up for the rest of the week.
Hence, we see NZD/USD around 0.72 levels by year-end, currently the pair is trading at 0.7692 levels.
