Sell NZD/USD at 0.6705 – Westpac

Sandeep Kanihama FXStreet Contributor

Analysts at Westpac are recommending to sell NZD/USD pair at 0.6705 levels for the target price of 0.6500, while maintaining trailing a stop loss of 0.6800.

Key Quotes

“Rationale:

We expect RBNZ to cut OCR by 25bp to 1.25% on 7 August, and signal potential for more. We expect a follow-up cut in November to 1.0%, with a risk this is delivered in September, and the OCR ultimately falls below 1.0%. Domestic activity is weaker than the RBNZ had forecast.
Markets are pricing 20bp of easing in August, and 42bp by November, implying markets should fall further if our forecasts prove correct.
NZ-US yield spreads have explained much of the NZD’s recent gains, but they should soon become a headwind: markets have priced in plenty for the Fed (100bp) but arguably not enough for the RBNZ.
Technically, NZD/USD’s 3c rise since May looks corrective, and may be giving way to a revisit of May’s 0.6500 low.”

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.

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