NZD/USD has potential to test 0.6500 mark – Westpac

NZD/USD retains upward momentum and has potential to test 0.6435 and then 0.6500 during the week ahead, writes Imre Speizer – Head of NZ Strategy at Westpac.

Key Quotes:

Economic momentum has been positive recently. Today’s update on business confidence was mixed – still weak but showing signs of bottoming.
 
The highlight of next week’s NZ calendar is the Q3 labour data. Unemployment should rebound from Q2’s abnormally low 3.9%, while average hourly earnings should maintain a solid 1.0% quarterly pace.
 
In response to the improved NZ data pulse, markets have significantly pared the chances of a 13 Nov rate cut, from around 115% three weeks ago to 55% currently. Westpac economists have shifted the forecast November OCR cut to
February.
 
Multi-month, we remain bearish, targeting 0.6200 by January. We expect the NZD/USD to be weighed down by a stronger USD which should continue to benefit from trade wars and global risks.