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3 Apr 2014
NZD/USD - Little scope for weakness beyond 0.83 - ANZ
FXStreet (Bali) - According to David Croy and Sam Tuck, Research Strategists at ANZ, weaker dairy prices may see the Kiwi lower but barring any major broad-based USD move, it is likely to struggle to trade any lower.
Key Quotes
"The GlobalDairyTrade Trade Weighted Price Index has plunged 18.2% since peaking on 4 February. Conversely, kiwi strengthened from 0.8050 touching 0.87 over the same period."
"The strength in soft commodity prices driving NZD is not solely dairy centric. As such, declining dairy prices do not point to a massive reversal in the terms of trade."
"New Zealand’s economic story of outperformance remains intact and absent a material turn in the USD, yield related currency support courtesy of a rising OCR will remain influential."
"Weaker dairy prices will take some of the froth out of the NZD, nudging it toward our Q2 forecast of 0.83, but barring a broader USD led move we see little scope for further significant weakness."
Key Quotes
"The GlobalDairyTrade Trade Weighted Price Index has plunged 18.2% since peaking on 4 February. Conversely, kiwi strengthened from 0.8050 touching 0.87 over the same period."
"The strength in soft commodity prices driving NZD is not solely dairy centric. As such, declining dairy prices do not point to a massive reversal in the terms of trade."
"New Zealand’s economic story of outperformance remains intact and absent a material turn in the USD, yield related currency support courtesy of a rising OCR will remain influential."
"Weaker dairy prices will take some of the froth out of the NZD, nudging it toward our Q2 forecast of 0.83, but barring a broader USD led move we see little scope for further significant weakness."