The slowdown in China’s growth has hurt the NZD but on the flip side, a soggy patch of US economic data has weighed on the US dollar. That has left NZD/USD in a neutral position, unable to breach the 0.8400 resistance area. US data is likely to continue to disappoint during the weeks ahead (see Chart 3). Moreover, Chinese data should be approaching a turning point. That should eventually benefit NZD/USD, such that by the time the RBNZ starts hiking the OCR (13 March we expect) it should be on the road towards 0.8545 (the October high).The main risks to our bullish outlook include another emerging markets shock, and US economic fundamentals exceeding our expectations.
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