NZD/USD to see further gains towards the 0.7315 mark – Westpac

NZD/USD spent the past week consolidating. Yield spreads, sentiment, and commodities are all supporting NZD/USD. The week ahead target is 0.7315, in the opinion of economists at Westpac.

NZ pricing intentions survey up to a fresh record high
“A break above 0.7220 would signal a move to 0.7315, and eventually to 0.7465 by year-end.”

“NZ-US yield spreads continue to rise. Interestingly, even though the Fed is being repriced in a hawkish direction, and RBNZ pricing is well above the RBNZ’s (and our) own OCR forecast, NZ’s beta has exceeded one.”
“Rising inflation expectations are surely one factor, but NZ interest rate markets also appear to be driven by positioning and domestic hedging flow from mortgage fixing, and the resultant yields are supporting the NZD. “

“Global sentiment is elevated, while the global commodity boom is starting to take agri-commodities for the ride.”