NZD/USD on course towards 0.70 - Natixis
Research Team at Natixis, suggests that given that NZ’s inflation is expected to be weak in Q3 (+0.1% year-on-year), this is likely to weigh on the New Zealand dollar in that it will heighten expectations of another interest rate cut by the Reserve Bank of New Zealand.
Key Quotes
“The central bank remains dovish, bearing in mind the New Zealand dollar is still one of the most overvalued currencies. At the same time, the central bank faces a dilemma, as the low interest rates are fuelling a property bubble.
In the short term, the NZD/USD will struggle to break below 0.70. Over the medium term, however, it is likely to pass below this level, mainly because of the stronger US dollar. In fact, the Reserve Bank of New Zealand is waiting for just one thing, which is for the Federal Reserve to raise the Fed Funds rate, as this would be likely to strengthen the greenback against its New Zealand counterpart.”
Author
Sandeep Kanihama
FXStreet Contributor
Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.
