NZDUSD: Need fresh cues for breakout from multi-week 0.7200-0.7350 range - Westpac

Imre Speizer, Research Analyst at Westpac, notes that the NZD/USD continues to probe the upside around the 0.7350 area but without success, suggesting that we need fresh news to see a breakout from the multi-week 0.7200-0.7350 range.

Key Quotes

“A boost in dairy prices this week could do it. Otherwise it will up to the US dollar to lead the way, although the US data calendar is second-tier and thin this week.

NZ’s data calendar this week is second-tier and is unlikely to buffet the NZD much. We have housing data from QV (Tue) and REINZ (Fri), Q2 manufacturing activity (Wed), and electronic retail sales (Fri). Of more interest for markets will be the first of the two GDT dairy auctions for September (Tue), futures prices currently signalling a 9% rise (which would follows gains of 10% and 20% in August).

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.”