NZD/USD: Scope for a Decline to 0.65 in 3 Months - Rabobank
NZD/USD: Scope for a Decline to 0.65 in 3 Months - Rabobank
According to analysts from Rabobank, the current environment in New
Zealand could lead to a signal that the Reserve Bank of New Zealand
(RBNZ) could cut rates again opening the doors for a decline in the NZD/USD pair to 0.65 on a three-month view.
Key Quotes:
“The
relief rally that followed the decision by the RBNZ on April 27 to
leave rates on hold did not last long. NZD/USD this morning traded at
its lowest levels since March as the market prepared for the likelihood
that RBNZ could cut interest rates again as soon as June 8.”
“Despite
the headwinds coming from the dairy sector the government recorded a
surprise budget surprise in the first nine months of the fiscal year to
March 31. This will ease the burden for Finance Minister English as he
delivers his eighth budget on May 26.”
“The difficult issue of
private debt falls squarely on the shoulders of the central bank and
this week English suggested that the RBNZ may considered further
restrictions on mortgage debt. The RBNZ will have the opportunity to
reveal how concerned it is by the elevated levels of both dairy and
mortgage debt when it publishes its semi-annual Financial Stability
Report tomorrow. In March the RBNZ reported housing debt growth of 8%
y/y.”
“If macro-prudential measures are tightened, this is likely
to be taken as a signal that the RBNZ will be more prone to cut rates
again in June. We see scope for a move towards NZD/USD 0.65 on a 3 mth
view.”
