Despite robust commodity prices, the Credit Suisse analyst team is neutral on the kiwi due to slow vaccine implementation and persistent policy resistance to market pressure.
“We are neutral on the NZD/USD, with a target range of 0.6850-0.7215 for Q3 (formerly 0.6925-0.7215).”
“New Zealand has rebounded faster than Australia, as evidenced by a big upside surprise in Q1 GDP. Border closures, however, remain a source of concern for growth expectations. The Australian travel bubble has had only limited effectiveness in stabilizing inbound tourism.”
“The country’s vaccination rollout falls behind all G10 economies, posing a severe problem for New Zealand’s tourism-based economy.”
“Markets predict the RBNZ to raise interest rates in Q1 2022, ahead of all other G10 central banks (other than the Norges Bank). This raises the stakes for the RBNZ to convey a hawkish message at its meeting on August 18th. The RBNZ has been able to gradually decrease asset purchases because to its flexible LSAP program. Tapering, on the other hand, was highlighted by the bank as a result of a smaller issuance plan rather than a reduction in stimulus.”
“While we prefer the NZD over the AUD in principle, we prefer fading AUD/NZD advances north of 1.08 to outright short AUD/NZD strategies from present levels due to the hawkish priced-in outlook.”/n
