Following a recent downturn subsequent to the RBNZ meeting, NZD/USD is currently in a consolidation phase. Analysts at OCBC Bank are examining the outlook for the currency pair.
Some unwinding of Kiwi longs may still be underway
Currently, it appears that interest rates will persist at a constraining level for an extended duration to fulfill the inflation objective. There might be an ongoing reduction in Kiwi long positions, but even after this adjustment, NZD maintains its appeal due to its attractive yield, especially considering that the RBNZ is expected to be among the last of the developed market central banks to implement rate cuts.
There’s a potential for a certain level of policy divergence with the Federal Reserve in the second half of 2024, and the eventual stabilization of the Chinese economy is anticipated to provide additional support for the New Zealand Dollar.
