NZD/USD Outlook: Down this week
NZD/USD remains hostage to the fortunes of the US dollar. NZD/USD remains poised to test the bottom of a two-month range at 0.7685. A break below this would then target the low 0.70’s. Fed tapering remains the main factor here so that a decent payrolls print this week is required keep our bearish NZD/USD outlook intact. NZ fundamentals remain supportive but there are no major data releases until the RBNZ’s MPS on 12 Sep so US factors will dominate in the meantime.
Our multi-month bearish forecast is dependent on Fed tapering starting in 2013. Such action could be announced at any of the FOMC meetings in September, October or December. If tapering is announced in September and is significant in magnitude, NZD/USD will probably break below 0.7685 towards the low 0.70’s. Alternatively, if the Fed disappoints the taperists, then the NZD/USD could rebound to the 0.8400-0.8500 area.
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