NZD/USD: Yield will help limit downside before modest recovery takes hold – MUFG


The New Zealand Dollar actually advanced marginally versus the US Dollar in September and was the best performing G10 currency. Economists at MUFG Bank analyze Kiwi’s outlook.

NZD holding up well but near-term risks still to the downside

The resilience of NZD in part reflected some improved optimism over the outlook for growth following the much stronger-than-expected real GDP growth in Q2. However, the breakdown of the GDP data suggests some caution over the outlook ahead.

A general election will take place on 14th October and the main opposition party, which is polling well, has promised to return the RBNZ policy mandate to inflation only and implement a more restrained fiscal stance.

Yield will help limit NZD downside for now before modest recovery takes hold as the Fed embarks on monetary easing in H1 2024. 

 

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