The strongest message from the Reserve Bank of New Zealand (RBNZ), the latest encouraging developments in the evolution of the Delta and the recent weakening of the dollar are the main positive factors for the kiwi, explain Westpac economists. They expect the NZD / USD to go towards 0.7300 from breaking above 0.7090.
Key statements:
“We remain bullish on NZD / USD for next week. A break above 0.7090 would indicate a possible rally to the 0.7300 area.“
“The main driver of this two-week-old rally is the dollar. It has weakened recently, due to the cautiousness of Fed Chairman Powell, some data losing momentum and hawkish comments from the ECB.”
“The government has slightly relaxed restrictions for the country outside of Auckland. And there are early signs of containment of the Delta outbreak in New Zealand, although that is a low confidence opinion given the limited sample to date. Positive cases at least they have not been accelerated, while vaccines continue – 24% of the population is now fully vaccinated. “
“We expect New Zealand’s GDP to rebound sharply from the expected decline in the third quarter, and the RBNZ could start to rise in October.”
“The Main risks to our bullish view of the NZD are a worsening of the Delta outbreak, and a rally in the dollar (pointing to payroll on Friday) “.
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