NZD/USD continues to grind lower – Westpac

Imre Speizer, analyst at Westpac, suggests that NZD/USD continues to grind lower, with 0.6350 their target for the week ahead.

Key Quotes

“Longer term, we see scope for it to fall to the mid-0.62s.”

“The main negative factor is yield spreads, with the RBNZ’s new-found boldness and likelihood of another cut in November keeping spreads depressed.”

“But trade wars are taking a toll also, both via the sentiment channel as well as via export commodity prices. China is NZ’s largest buyer of dairy products, and we suspect the 9% fall in prices since May is partly related to China’s trade war-related slowdown.”

“The main risk to our bearish view is the Fed lowers its rate by more than the 75bp we expect this year (or signals such).”