NZDUSD: Break above 0.7325 would signal a move to the 0.7500 area - Westpac

Imre Speizer, Research Analyst at Westpac, notes that the month-old NZD/USD rally remains intact, although 0.7325 is proving a formidable barrier.

Key Quotes

“We see a greater chance of that level breaking than a multi-cent fall during the weeks ahead. A break above 0.7325 would signal a move to the 0.7500 area, where there was much congestion during Q2 2015.

The main NZ event with market moving potential this week is RBNZ Governor Wheeler’s speech tomorrow on monetary policy which will be published. As such, it could contain fresh policy signals. NZ data is minor, only the July trade balance. In the US, Fed Chair Yellen’s annual Jackson Hole speech on Fri has the potential to ruffle the US dollar.

3 months: We target 0.70, based on an assumption the Fed will hike in Dec and the RBNZ will cut in November and possibly again after that. However the persistent backdrop of global demand for high-yielding currencies is strong - if the Fed doesn’t hike, then 0.75+ is likely instead.

1 year: Our economic fundamentals based forecast is 0.65.”