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11 Feb 2013
Forex Flash: NZD/USD targets 0.8700 by year-end – BNZ
Whether or not market participants chose to believe them, last week’s dismal HLFS employment figures were successful in knocking some of the heat out of the NZD – the NZD/USD ended the week around a cent lower than where it began.
However, according to the BNZ Research Team, “we’d view this as more of a temporary setback, rather than a change in the trend. The fundamentals underpinning the currency remain strong and we don’t expect to see sustained declines. In fact, we have just revised our NZD forecasts up. We now see the NZD/USD at 0.8700 by year-end and a push up to 0.9000 can no longer be ruled out.”
This more bullish NZD view reflects our stronger NZ economic growth forecasts for 2013 and 2014 (see our economic note), the improving global backdrop, the tightening bias of the RBNZ. Still, our expectations about the timing and duration of the NZD cycle haven’t really changed. In essence, a higher ‘peak’ in the NZD/USD this year means a harsher correction is likely to follow in 2014.
However, according to the BNZ Research Team, “we’d view this as more of a temporary setback, rather than a change in the trend. The fundamentals underpinning the currency remain strong and we don’t expect to see sustained declines. In fact, we have just revised our NZD forecasts up. We now see the NZD/USD at 0.8700 by year-end and a push up to 0.9000 can no longer be ruled out.”
This more bullish NZD view reflects our stronger NZ economic growth forecasts for 2013 and 2014 (see our economic note), the improving global backdrop, the tightening bias of the RBNZ. Still, our expectations about the timing and duration of the NZD cycle haven’t really changed. In essence, a higher ‘peak’ in the NZD/USD this year means a harsher correction is likely to follow in 2014.