NZD: Resistant to Local Factors - ANZ
Research Team at ANZ, suggests that the NZD remains a strong currency despite signs of hardship within the NZ dairy sector.
“It has become evident within local data that other sectors (specifically tourism, construction, and other agricultural sectors) are picking up the deficit left by the dairy industry. This has led to a currency that has been abnormally resistant to local factors such as OCR moves.
Due to these factors, we feel that it is necessary to lift our NZD/USD forecasts. NZD has been broadly strong recently. When we measure its performance against its G10 contemporaries, we find few exceptions.
The most notable exception is JPY, where JPY strength has far outweighed NZD as markets test the resolve and ability of the BoJ to keep its currency weak. The other exceptions are the ‘oil’ currencies (CAD and NOK), which have rebounded strongly with the rebound in oil.
We see room for the NZD to make gains against these currencies. NZD/GBP is unusually strong, something we do not expect to resolve until after the June Brexit referendum. We also note that AUD/NZD and NZD/USD have both been mean-reverting of late.”