NZD / USD to extend its downward correction from breaking below 0.6945 – Westpac

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Westpac economists warn that the momentum of the New Zealand economy has slowed and there are also restrictions in the housing market. They estimate that a break below the 0.6945 level in the NZD / USD would lead to further declines in the price.

Key statements:

“NZD / USD’s downward correction from February 25 high of 0.7465 may not be complete yet. A break below 0.6945 would confirm this, while a break above 0.7070 would lead us into a bullish short plazo“.

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“Taking a step back from short-term volatility, We remain NZD / USD bullish, expecting 0.7600 by the end of the year. The main drivers are likely to be a weaker US dollar (due to improved global growth relative to the US) and optimistic global risk sentiment. “

“Next week’s RBNZ (New Zealand central bank) decision is unlikely to upset the NZD much if it repeats its well-known policy messages. That said, we are always aware of the risks in both directions. A subdued scenario would include comments on the negative impact of recent government housing restrictions, as well as the slowdown in economic momentum in recent months. A hawkish (less likely) scenario would point to the risks that the looming inflation spike could be sustained. “

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