In mid-April of this year, the NZD/USD pair rose to 0.7054, an 11-month high, as the likelihood of a near term interest rate rise by the US Fed continued to diminish. But since then, outlook of decelerating growth in Australia, which is New Zealand’s biggest trading partner, and renewed worries regarding the country’s dairy sector have been a drag on the New Zealand dollar, noted Lloyds Bank in a research report.
Even if the Reserve Bank of New Zealand maintained the key interest rate at 2.25% in April, Governor Wheeler mentioned that the central bank might need to ease the monetary policy further to support inflation outlook. The NZD/USD pair is expected to move towards 0.70 in the short term, added Lloyds Bank. However, given the likelihood of the US Fed hiking rates twice in 2016 and the RBNZ keeping an easing bias, the currency pair is likely to move towards 0.64 by late 2016, said Lloyds Bank.
