FXstreet.com (Barcelona) - Neither the FOMC nor ECB provided tangible inspiration but both seem closer to policy action in coming weeks, chipping away at greenback’s luster. In the meantime, European officials are moving slowly, however bears are not likely to be rewarded ahead of Jackson Hole end-August.
The ECB meeting last week announced enough potential stimulus to caution markets against shorting the kiwi. According to Robert Rennie, an FX Strategist at Westpac, “With the NZD/USD poised to break the key 0.8200 - 0.8220 resistance level (then target 0.8450), we adopt a bullish stance again this week despite the upcoming Australian and Chinese economic data releases posing upside risks.”
In addition, the long-awaited correction to the flattening trend has started and targets 115bp in the 2-10yr swaps curve. Higher global core yields this week, driven by improved risk sentiment, will be the main catalyst for a temporary NZ steepening.
The ECB meeting last week announced enough potential stimulus to caution markets against shorting the kiwi. According to Robert Rennie, an FX Strategist at Westpac, “With the NZD/USD poised to break the key 0.8200 - 0.8220 resistance level (then target 0.8450), we adopt a bullish stance again this week despite the upcoming Australian and Chinese economic data releases posing upside risks.”
In addition, the long-awaited correction to the flattening trend has started and targets 115bp in the 2-10yr swaps curve. Higher global core yields this week, driven by improved risk sentiment, will be the main catalyst for a temporary NZ steepening.
