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Fundamental Forecast for NZD: Neutral with a Bearish Bias

  • The weak US Dollar has helped NZD/USD climb back from its recent 11-month+ low.
  • The Kiwi’s outlook remains negative but better levels may be available to short the pair.
  • Check out the DailyFX Economic Calendar and see what live coverage of key event risk impacting FX markets is scheduled for the week on the DailyFX Webinar Calendar.

This week’s weakness in the USD has given the NZDUSD pair a reprieve from its medium-term down-trend but the outlook still remains bearish for the Kiwi currency. The currency brushed off Thursday’s better-than-expected consumer confidence data and remained below 0.7000.

And the Kiwi currency is expected to remain weak with no interest rate hikes expected until early 2019. At the last monetary policy meeting, RBNZ Governor Graeme Wheeler said that while growth has increased and become more broad-based, core inflation has remained low. He added that while headline inflation in the March quarter so mainly due to higher tradables inflation, particularly petrol and food prices,

These effects are temporary and may lead to some variability in headline inflation over the year ahead.”

On the weekly chart, the recent 0.69500 level may prove an opportunity to set up a NZDUSD short, although sellers should wait for the April 24 high of 0.70575, with the 0.68180 low of May 8 and the May 30 (2016) low of 0.66758 targets for the bears.

Kiwi Dollar: The Selling Pressure is Off For Now

Chart: NZDUSD Daily Time-Frame (January 16 – May 12, 2017).

Chart by IG

--- Written by Nick Cawley, Analyst.

To contact Nick, email him at nicholas.cawley@ig.com

Follow Nick on Twitter @nickcawley1

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