The New Zealand dollar was the fourth best performing G10 currency in April as the NZD/USD pair climbed from 0.6990 to 0.7163 – with the broadening of optimism over the outlook for global growth providing support. Economists at MUFG expect the kiwi to continue enjoying support as hike rate expectations are being brought forward.
Fundamental support for stronger NZD
“We still see the economy rebounding and eventually the pricing of rate hike action being brought forward that will help provide support for NZD.”
“Rate expectations by end-2022 remain stable but the 2-year yield began to drift higher toward month-end and we see upside risks over the coming months as the global economy picks up further.”
“While there is still scope for patience, we believe it is inevitable that speculation will build in H2 over a shift in policy stance by the RBNZ. The 3mth Bill market implies less than two 0.25 rate increases by the end of 2022 and in the second half of this year that is set to increase providing NZD support.”
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