NZD/USD Outlook: Neutral this week
This week is likely to witness opposing forces – strong NZ fundamentals countered by the developing US fiscal crisis. The US Government remains in partial shutdown mode, and there is now a chance (admittedly low at this stage) of a US debt default. While these factors are hurting the US dollar, they are also causing risk appetite to weaken, in turn dampening the NZD. Any pullback should be contained by 0.8200, though, and above 0.8350 would signal a resumption of the uptrend to beyond 0.8430.
Longer term, if US fiscal agreements are reached, then multimonth US dollar weakness due to a continuation of Fed money printing until 2014 should support NZD/USD. Combined with stronger NZ fundamnetals and RBNZ tightening from early 2014, we see a good chance of NZD/USD exceeding 0.8600 by year end
Read the full report: Market Research
Westpac