The New Zealand dollar is losing ground on a softer economic outlook warn analysts at CIBC. They forecast the NZD/USD pair at 0.62 during the third quarter and at 0.61 by year-end.
Key Quotes:
“The NZD is facing depreciation pressure sourced in a number of factors, including that from broad negative global risk sentiment. We see pressures continuing to build in coming weeks, and anticipate a retest of recent NZD/USD lows below 0.6200.”
“Already there has been evidence of slowing in consumer and business sentiment, and of a decline in house prices. Challenges to domestic activity from sharply higher rates are a negative that will be exacerbated by weak activity in China – New Zealand’s largest trading partner, and by the outrun of higher rates and softer outlooks globally. In this environment, higher policy rates in New Zealand will not support the currency beyond present levels.”
“A key area of resistance in NZD/USD is between 0.6530 (January low) and 0.6576 (June high). While spot is held below this band, risk is for another test of the downside.”
