New Zealand Dollar Fundamental Forecast: Neutral
- Reduction in US China trade war concerns resulted in aggressive New Zealand Dollar gains
- RBNZ may disappoint monetary policy bets on third quarter CPI data, sending NZD[1] falling
- US midterms, with Fed rate hikes still in sight, offer level of uncertainty for sentiment and NZD
We just released our 4Q forecast for equities, which may impact NZD, in the DailyFX Trading Guides page[2]
The pro-risk New Zealand Dollar was on pace last week to mark its best performance against the US Dollar[3] in almost two months. After a shaky October for global stock markets, November began on an upbeat as the S&P 500[4] set itself up for the most upside progress over the course of one week since March. The backdrop for this optimism seemed to be a cooldown in US China trade war concerns[5] which was further bolstered Friday[6].
This coming week holds a level of uncertainty for NZD prices given multiple critical event risks. Starting with domestic concerns, the New Zealand Dollar awaits both a jobs report and an RBNZ rate decision. The former is due to cross the wires first and may even surprise to the upside. Such has been the case for New Zealand economic data as of late, suggesting economists are underpricing the health and vigor of the economy.
However, overnight index swaps are not pricing in one rate hike from the RBNZ in 2019, suggesting that New Zealand’s jobs report may have limited implications for NZD. Such was also the same scenario
