17 Jun 2015
NZD/USD could hit 0.65 in the medium term – Danske Bank
FXStreet (Edinburgh) - In the view of analysts at Danske Bank, the kiwi could drop to the 0.65 region in the next 6-months.
Key Quotes
“The significant terms-of-trade shock which NZD has suffered during the course of the past year is now feeding through to the growth and inflation picture for New Zealand”.
“RBNZ is in easing mode which will weigh on NZD near term. But with some 40bp cuts already priced on RBNZ we see limited downside pressure on NZD from this front”.
“But, as we see USD strength returning in the near future ahead of a first Fed hike in September, NZD/USD is set to move lower on a clear divergence in monetary policy”.
“We have lowered our near-term forecasts and now see the cross hitting 0.65 in 6M (prev. 0.69). On a 12M horizon we do, however, expect USD strength to fade, and with upside risks to agricultural prices from a structural point of view, we expect NZD/USD to stabilise around the 0.70 mark and keep our 12M forecast unchanged at this level”.
Key Quotes
“The significant terms-of-trade shock which NZD has suffered during the course of the past year is now feeding through to the growth and inflation picture for New Zealand”.
“RBNZ is in easing mode which will weigh on NZD near term. But with some 40bp cuts already priced on RBNZ we see limited downside pressure on NZD from this front”.
“But, as we see USD strength returning in the near future ahead of a first Fed hike in September, NZD/USD is set to move lower on a clear divergence in monetary policy”.
“We have lowered our near-term forecasts and now see the cross hitting 0.65 in 6M (prev. 0.69). On a 12M horizon we do, however, expect USD strength to fade, and with upside risks to agricultural prices from a structural point of view, we expect NZD/USD to stabilise around the 0.70 mark and keep our 12M forecast unchanged at this level”.