In view of RBNZ dovish policy stance, NZD/USD at 0.65 on a 1 to 3 month view – Rabobank

Eren Sengezer FXStreet

The NZD/USD pair is likely to trade around 0.65 in a 1-3 month view amid the Reserve Bank of New Zealand's (RBNZ) dovish rhetoric, Rabobank Senior FX Strategist Jane Foley argues.

Key quotes

"In Q2, New Zealand GDP shrank by a record 12.2% q/q. This contraction was around half of the 23.5% q/q fall that the Treasury had predicted back in May. The better than expected outcome was a consequence of the country’s domestic COVID related restrictions being relatively shortlived."

"All measures were lifted in New Zealand in June, although Auckland temporarily reimposed a lockdown in August. Despite the country’s relative successes in stamping out COVID-19, many border restrictions remain, meaning that its tourism and education sectors in particular remain under pressure."

"Last month the RBNZ remarked that “the pandemic and associated travel restrictions could have a significant long-term negative impact on the economy”. Given the second wave of covid-19 underway in Europe and parts of the US, it is likely that border restriction will remain in place for some time yet."

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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