Four main factors continue to point to further downside in NZD/USD, argues Australia and New Zealand Banking Group (ANZ).
1– Dairy prices have stabilised, but prices have flattened, implying downside risks remain.
2– Political risks mean the election is not the fait accompli it once was.
3– ANZ monthly inflation gauge validates markets move to reducing probabilities for RBNZ action.
4– USD developments remain positive in line with ANZ’s ahead of consensus FOMC March lift off call.
In line with this view, ANZ maintains a short NZD/USD position from 0.86 targeting a move to 0.82.