The recent improvement in global sentiment has supported the NZD. A continuation of this theme should push it higher to 0.8430 during the week ahead. Beyond that would probably require a more substantial catalyst, one such candidate being the 13 March RBNZ meeting where a rate hike is highly likely.Longer term, we remain bullish. Increasing NZ-US interest rate differentials plus a record high terms of trade should help propel NZD/USD towards 0.8545 (the October high) by mid year. Risks to our long term outlook include another emerging markets shock, and US economic fundamentals exceeding our expectations.
Read the full report: FX Research
Westpac