The NZD/USD pair is neutral for the week ahead, according to Westpac economists, but there is a glimmer of downside danger. Next week’s NZ event calendar includes two key market events: the RBNZ MPR meeting (14 July) and Q2 CPI data (16 July), both of which point to increased volatility.
“The NZD/USD exchange rate is currently neutral, with only a sliver of downside risk. To boost our confidence in a multi-week bearish forecast, we need a breach below 0.6925.”
“The RBNZ is expected to back market pricing implicitly, causing the NZD to rise modestly. A dovish or hawkish surprise, on the other hand, is equally likely. The former could be as simple as a little shift in instructions (retaining the previous guidance language is extremely unlikely given developments). It would be a hawkish surprise if the Fed announced imminent tightening.”
“The second quarter’s CPI will be the first of the’spike’ quarters, and will provide insight into its long-term viability. The NZIER poll released this week provided some indications that wage inflation may be on the rise.”/n
