NZD/USD has been stuck in a 0.7685-0.7860 range for two weeks but a break to the downside looms. Strong US payrolls data supports a September QE tapering start and that should weigh on NZD/USD for the next few months. A break below 0.7685 points towards 0.7200 by September. Economic momentum has continues to slip, albeit from heady heights (Chart 2), while speculators have flipped from an extremely long-NZD state in early May to a slightly short-NZD state now. There’s scope for these players to increase their short positions further (Chart 3). The main item to watch in NZ this week will be NZIER business confidence. In US it will be Bernanke’s speech..
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Westpac