NZD: Macro backdrop remains positive - Westpac

Research Team at Westpac, suggests that the macro backdrop remains positive for the NZD as the New Zealand’s growth is firm, rising and broad-based; commodity prices are rising and real interest rates remain well above peers.

Key Quotes

“This week’s events have the potential to buffet the NZD, though, with the BOJ, FOMC and RBNZ within hours of each other. The latter is likely to repeat its intention to cut in Nov, which will probably push NZD/USD slightly lower, but there’s a risk the easing bias is watered down instead, in which case NZD/USD would rise by around 1c. Given the concentrated central bank event risk this week, we are neutral for the week ahead, within an overall very upbeat macro backdrop.

Technical: Rising wedge may have “topped”. Rebounds off trend support are critical. A series of closes above 0.7400 are needed to avoid a more aggressive test of rising support (now 0.7245) within potential retracements to 0.7165 or even 0.6970.”