NZD/USD set to test 0.6705 during the week ahead – Westpac

Economists at Westpac expect the NZD/USD pair to enjoy a near-term boost from a tired greenback and rising NZ inflation expectations to 0.6705. In the medium-term, though the kiwi is set to fall below 0.6500.

NZ inflation expectations survey could mark a 30-year high

“NZD/USD has recently been boosted by the pullback in the USD (in turn, partly related to the ECB’s hawkish shift), and should test 0.6705 during the week ahead.”

“Global sentiment has improved recently and local fundamentals remain supportive. RBNZ’s inflation expectations survey could post a 30-year high tomorrow. That could motivate markets to price even more into rates and the NZD, even though pricing is already quite full.”

“Multi-month, we continue to expect the USD to benefit from the Fed’s looming tightening cycle until around mid-2022. That should at least slow any NZD rallies, and could even cause a final dip to below 0.6500. The latter scenario could be a medium-term buying opportunity.”