NZD/USD: Positive bias for the week, targeting the 0.71 area - Westpac

Imre Speizer, Research Analyst at Westpac has adopted a positive bias for NZD/USD for the week ahead, targeting the 0.71 area.

Key Quotes

“The weakening US dollar should be the main factor (driven by rising US political risks - see next page); but stronger dairy prices, a solid NZ Budget, and speculators’ short positioning will also help.”

“The NZ data calendar this week is low key, with only April trade to watch on Wednesday. However the annual NZ budget on Thursday will be worth watching. We expect a strong fiscal position and outlook to be presented via a higher and rising operating surplus plus a low and declining net debt position. There will be a positive fiscal impulse in the form of tax relief and infrastructure spending, but much of that money has already been set aside and is therefore old news. If there’s any reaction from the NZD market, it is likely to be a positive one in response to the reaffirmation of NZ’s solid fiscal position.”

“Three months ahead: Multi-month, we stick with our bearish outlook, targeting 0.68 by year end (and into the mid-0.60s next year). Higher US interest rates and a stronger broad US dollar should eventually reassert themselves as the dominant trends influencing global markets including NZD/USD.”