This just a dip, NZD/USD forecast to rise to 0.7500

Analysis via MUFG on the New Zealand dollar, the bank has forecasts for NZD/USD at:

• end Q1 around 0.7400
• end H1 around 0.7500

In brief from their piece:

• New Zealand dollar ... supported by building global recovery optimism
• Bloomberg's commodity price index to its highest level since October 2018
• It should be no surprise then that commodity-related G10 currencies have outperformed so far this year
• New Zealand has been one of the global success stories in combating COVID which has limited the negative economic impact
• economy is experiencing more of a "v" like recovery
• strength of the recovery has prompted the RBNZ to drop its easing bias
• At the same time though the RBNZ continues to emphasize that it does not plan to raise rates until at least 2023 given the output gap is not expected to close until 2H 2022. The kiwi would likely strengthen more sharply if the RBNZ raised rates well ahead of other major central banks. Low rates for longer is creating financial stability risks. House prices have risen sharply prompting the RBNZ to tighten lending standards to combat overheating risks in the housing market.