A summary of analysis on NZD/USD


  • We suspect the looming RBNZ decision on 13 Nov is keeping the bulls at bay. RBNZ Dep. Gov. Bascand yesterday gave the strongest hint yet that it will probably cut then. At 100% priced, with a follow-up cut 80% priced, it does seem aggressive
  • Recent ,,, data have been firmer than expected, suggesting the RBNZ has justification in remaining on hold after November
  • "Multi-month, though, we remain bearish, targeting 0.6130 which was the 2015 low. We expect the NZD/USD to be weighed down by a stronger USD which should continue to benefit from trade wars and global risks.


  • NZD inevitably performs poorly during economic downturns and global economic momentum remains to the downside. Easier global monetary policy currently underway and a trade war truce might be enough to stabilise growth and even engineer a modest recovery, which explains our more positive NZD outlook for next year. Despite the soft global backdrop, NZ commodity prices are holding up well and are NZD-supportive.
  • Domestic factors remain largely NZD-negative, with low levels of confidence widely evident and GDP growth on a weaker, sub-trend path. Further RBNZ rate cuts look inevitable, although these are well-priced
  • Our 3-6 month target for the NZD remains at 0.6150, with two-sided risks, mainly emanating from the global economic outlook. If economic growth momentum remains to the downside and the trade war re-escalates then that would raise the chance of a sub-0.60 handle for the NZD seen typically under global recession-like conditions.
  • On the positive side, more encouraging developments in the trade war and a turnaround in global growth would inject some life into the NZD and at the same time trigger a broadly-based reversal in the USD, adding to potential NZD/USD gains.