Whilst technically stretched, there’s more life left in NZD/ USD and there’s potential to match the 2016 high of 0.7485, according to Imre Speizer, Research Analyst at Westpac.
“NZD/USD’s two-month old rally remains mainly driven by the falling US dollar. However that rally is technically stretched, and speculators are as long as they were in 2014, warning of a decent correction sometime in the next few weeks.”
“The data highlight this week will be the Q2 CPI release on Tue. We estimate it slipped from 2.2% yoy to 1.8% yoy (1.0% qoq to 0.1% qoq). Also watched by the market will be the GDT dairy auction (Tue). Migration, services PMI are also on the slate.”
“Three months ahead: Our medium term outlook for NZD/USD is mainly dependant on the outlook for the US dollar. A rebound in the US dollar by year end could drag NZD/USD back to the 0.69 area. However, US fundamental developments (economic and political) are not promising.”