• NZD/USD likely to trade around 0.68 by end-2018 – Lloyds bank

    Source: FxWire Pro - Commentary / 28 Feb 2018 09:37:49   Eastern Standard Time

    The New Zealand dollar has come under pressure after deterioration in the global risk environment after having rallied to a new medium-term high against the U.S. dollar, close to 0.7450, stated Lloyds Bank in a research report. The decline in global equity and commodity prices lowered investor appetite for risk, driving a rise in demand for U.S. dollars. But despite of recent volatility, little has changed from a fundamental perspective to change the bearish view.

    Uncertainty continues to stay over the effect of the government’s plan to change the RBNZ’s mandate to a dual inflation-employment regime. Meanwhile, the U.S. Fed is expected to hike interest rates three times this year, while the Reserve Bank of New Zealand is expected to stand pat, at least through the first half of the year.

    “The combination of political uncertainty and a deeper move into negative territory in the 2-year NZ-US interest rate differential should place downward pressure on the NZD/USD. As such, we forecast the currency pair to decline to 0.68 by end-2018 and 0.66 by end-2019”, added Lloyds Bank.

    At 14:00 GMT the FxWirePro's Hourly Strength Index of New Zealand Dollar was slightly bearish at -71.353, while the FxWirePro's Hourly Strength Index of US Dollar was highly bullish at 119.313. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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