Barclays say the New Zealand dollar is overvalued but nevertheless their 3 month directional outlook for it is neutral. the bank cites (bolding mine, and ICYMI, their AUD view here) :

  • New Zealand's late-cycle economic position and currency overvaluation (about 7% above its long-term REER average) will impede appreciation versus USD.

On monetary policy divergences between the RBNZ and the Federal Reserve:

  • Weaker-than-expected activity and inflation data have encouraged a more dovish RBNZ tone this year,
  • while the Fed tightens policy,
  • portending a widening between US-NZ interest rates.
  • Monetary policy uncertainty is likely to persist until H2 with new RBNZ Governor Adrian Orr's first Monetary Policy Statement not due until 10 May.

The new Labour-NZ First coalition government appears to have softened its stance on immigration, noting that it does not have a target to reduce immigration, while material changes to the monetary policy framework are less likely.