NZD/USD could come under pressure on possible dovish RBNZ - Westpac

Analysts at Westpac offered their outlook for the Kiwi.

Key Quotes:

"NZD/USD Outlook 1 week: NZD/USD has been oscillating in a 5c range during the past six months. Last week’s rebound from the 0.6900 area could easily extend to the 0.7150 area during the week ahead, especially if the FOMCinduced US dollar unwind continues. However, local events are more likely to lean the other way. The GDT dairy auction on Tue night is priced by futures markets to result in a 4% fall in WMP. That would extend a 23% total fall since December. The RBNZ OCR Review on Thursday is likely to repeat its long-time-on-hold message, but there’s a risk of a slight dovish shift in tone. Weaker dairy prices, subdued housing, and slower economic growth are only partly offset by stronger inflation and a weaker NZD TWI.

3 months: Against a backdrop of large oscillations in NZD/USD during the past six months, we err on the side of negativity for the next few months. Our main rationale remains our expectation the US dollar will continue to trend higher amid a tighter Fed and stronger US economy. Adding to that, we have an accommodative RBNZ (OCR to remain at its 1.75% record low for the next two years) and, more recently, dairy price weakness."

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