According to Mike Jones, currency strategist at Bank of New Zealand, the Kiwi resilience might be due to a combination of factors, saying, "this firmness likely reflects the support from a widening interest rate differential. Indicative of such, NZ-US 3-year swap differentials increased around 10bps last week, to 235bps."
Looking ahead, Mike notes "there is a risk this differential narrows a little in the near-term, should local markets begin to price RBNZ rate cuts again", adding that "with global slowdown fears increasingly pervasive, this could begin to expose some chinks in the NZ dollar’s armour."
Mike concludes giving a heads-up on this week’s nuch of Chinese data; "it will be important in setting the tone for the NZD in coming weeks. Signs of a faster than expected slowdown in Chinese activity (watch Friday’s GDP figures) would see the NZD and AUD underperform."