Despite rising frictions with Iran or an escalation of trade dispute with China, it seems that the kiwi is trading the opposite way. Although a risk-off sentiment dominates the marketplace, with safe-haven in demand, the New Zealand dollar remains in gain territory. Yet the trend is about to reverse, as fundamentals should come back to play. The recent release of April manufacturing PMI at 53 (prior: 51.9), albeit ticking higher, missed forecasts of 54.5 while last week decision from the Reserve Bank of New Zealand to cut the Official Cash Rate at an historical low of 1.50%, even if foreseen, did not push the currency much downward. Furthermore, the decline in 1Q producer prices, similarly to headline CPI, confirms a global weakness of inflation, leaving the RBNZ with no other options but to ease monetary policy and potentially cut its key rate a second time this year if necessary.
NZD/USD currently trades at October 2018 range (-0.95% since RBNZ rate cut announcement). The pair is expected to decline further. Major support at 0.6517 (31/10/2018 low) remains.
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