NZD/USD: Negative bias for the week ahead - Westpac

Imre Speizer, Research Analyst at Westpac, is switching from a neutral to negative bias for the week ahead, noting the US dollar has continued to firm since its late March rebound, albeit in grinding fashion and target 0.6900 or below for the NZD/USD pair.

Key Quotes

“Speculators remain moderately short but are not yet at levels extreme enough to signal a rebound.”

“The data calendar this week is again low key. We have REINZ housing data sometime during the week, electronic spending (Tue), and manufacturing PMI and food prices (Wed). None of these should ruffle the NZD significantly.”

“Three months ahead: Multi-month we see potential for the NZD’s decline to extend to 0.6800, driven mostly by a rising US dollar. However the late April period could witness a disturbance related to US government shutdown risks. Also, the next major NZ data event is on 20 April when we get Q1 CPI (a large rise is in store) which might give the NZD a short-term boost. Ultimately, though, the dominant global theme of a stronger US economy, rising US interest rates and a strong US dollar should endure for the balance of the year.”