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12 Mar 2015
NZD/USD unable to hold above 0.7400
FXStreet (Córdoba) - Before Wall Street opening bell, the NZD/USD pair, rose to 0.7442, reaching the strongest level since Monday but quickly pulled back to 0.7420. Recently, as the US dollar recovered ground across the board, dropped under 0.7400.
The pair reached a fresh session low at 0.7364 and it was trading at 0.7370, up 1.08% for the day, supported by a weak US dollar and the decision of the Reserve Bank of New Zealand but according to Jane Foley, Senior Currency Strategist at RAbobank, the pair is headed lower.
“Measured against the USD we do see room for further some slippage in the value of the NZD. Although the RBNZ raised the OCR rate no less than four times last year from 2.5% to 3.5%, it has now made clear that policy is on hold. Inflation expectations have fallen and largely as a result of the drop in oil prices, headline CPI inflation is expected to fall to around zero in the current quarter. In contrast to the Fed, the RBNZ appears to be sitting on the fence as to whether the next move in rates will be up or down. Assuming that broad based USD strength sustains this year, we see risk of NZD/USD trending lower towards 0.70 this year”, explained Foley.
NZD/USD holding above 2015 lows
The recovery of the kiwi, brought the price back to the level it had at the beginning of the week. The rebound started after the pair approached 0.7175 where 2015 lows lie. If it breaks below NZD/USD would be trading at the lowest since March 2011.
The pair reached a fresh session low at 0.7364 and it was trading at 0.7370, up 1.08% for the day, supported by a weak US dollar and the decision of the Reserve Bank of New Zealand but according to Jane Foley, Senior Currency Strategist at RAbobank, the pair is headed lower.
“Measured against the USD we do see room for further some slippage in the value of the NZD. Although the RBNZ raised the OCR rate no less than four times last year from 2.5% to 3.5%, it has now made clear that policy is on hold. Inflation expectations have fallen and largely as a result of the drop in oil prices, headline CPI inflation is expected to fall to around zero in the current quarter. In contrast to the Fed, the RBNZ appears to be sitting on the fence as to whether the next move in rates will be up or down. Assuming that broad based USD strength sustains this year, we see risk of NZD/USD trending lower towards 0.70 this year”, explained Foley.
NZD/USD holding above 2015 lows
The recovery of the kiwi, brought the price back to the level it had at the beginning of the week. The rebound started after the pair approached 0.7175 where 2015 lows lie. If it breaks below NZD/USD would be trading at the lowest since March 2011.