NZD/USD: Vulnerable to breaking lower - Westpac

NZD/USD remains vulnerable to breaking lower, with 0.7200 the key area (a neckline for “head-and-shoulders” enthusiasts), according to Imre Speizer, Research Analyst at Westpac.

Key Quotes

“The economy remains healthy but momentum has slowed, and election uncertainty (it’s on 23 Sep) is probably weighing on the NZD. We can see this on the chart across: despite a weaker USD over the past 3 weeks, and commodities and interest rate spreads being stable, NZD/USD has fallen. A “new” factor has entered the mix – we can guess this is the looming election.”

“We maintain our long-held expectation that shrinking NZ-US yield spreads will eventually depress NZD/USD, targeting 0.70 by year end.”