Back
19 May 2015
NZD/USD likely to challenge 0.7175/95 lows – Westpac
FXStreet (Barcelona) - The Team at Westpac expects NZD/USD to resume its medium-term downtrend and challenge lows at 0.7175/95.
Key Quotes
“NZD/USD has been weighed down by market expectations the RBNZ will cut the OCR this year. Housing market tightening measures, announced by the RBNZ and the Government during past week, have emboldened that view, while today's surprising stability in inflation expectations may be viewed as providing a minor rally to sell into. Actual CPI outcomes are expected to remain near zero all year. We target sub-0.7300 during the next few weeks.”
“Model: Our total yield signal remains negative NZD courtesy of the 45bp in RBNZ rate cuts priced in by year’s end. However, that signal is realistically about as negative NZD as it's going to get for the time being – it's hard to see the RBNZ over delivering on what is priced in. Moreover, our growth signal for NZD is going from strength to strength thanks to last week’s outsized jump in retail sales and all told that nudges the model into adding to its long NZD exposure.”
“Technical: Comprehensive negative momentum across time frames confirms a return to the medium term downtrend. Downtrend lows at 0.7175/95 are likely to be challenged.”
Key Quotes
“NZD/USD has been weighed down by market expectations the RBNZ will cut the OCR this year. Housing market tightening measures, announced by the RBNZ and the Government during past week, have emboldened that view, while today's surprising stability in inflation expectations may be viewed as providing a minor rally to sell into. Actual CPI outcomes are expected to remain near zero all year. We target sub-0.7300 during the next few weeks.”
“Model: Our total yield signal remains negative NZD courtesy of the 45bp in RBNZ rate cuts priced in by year’s end. However, that signal is realistically about as negative NZD as it's going to get for the time being – it's hard to see the RBNZ over delivering on what is priced in. Moreover, our growth signal for NZD is going from strength to strength thanks to last week’s outsized jump in retail sales and all told that nudges the model into adding to its long NZD exposure.”
“Technical: Comprehensive negative momentum across time frames confirms a return to the medium term downtrend. Downtrend lows at 0.7175/95 are likely to be challenged.”