NZD/USD: Damp market mood caps the rally, outweighing strong domestic factors – Westpac

Domestic factors remain supportive, particularly NZ commodity prices, but the global sentiment and a weak USD are being questioned and cap the NZD/USD pair for now, economists at Westpac inform.

See – NZD/USD to strengthen to 0.75 as economic recovery continues – CIBC

Key quotes

“The year-old NZD/USD rally peaked at 0.7465 last week. It’s unclear whether that level will represent a minor or major top. Should the recent pullback extend below 0.7200, we’d opt for the latter interpretation.”

“Domestic fundamentals remain NZD-supportive, particularly commodity prices. This week we saw a surprisingly large jump in GDT dairy auction prices, with WMP gaining 21% and the overall dairy index gaining 15%. The NZD didn’t react, though, perhaps because markets ceased closely following GDT results after fairly stable prices over the past five years.” 

“Global factors have been less supportive recently, equities looking toppish as rising yields question valuations, and the US dollar looking resilient as US growth prospects improve.” 

“Global factors will dominate NZD/USD direction. Our medium-term outlook for upbeat global sentiment and a weaker USD could be tested during the weeks ahead.”


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