The uptrend continues, but it is one of the many trends formed in March during the first wave of the pandemic in Europe and the United States. Since the beginning of this year, its intensity has been completely lost. The NZD stopped receiving new stimulus signals from China, although economic indicators in New Zealand itself were fine.
This month, the NZD came under pressure on the back of the strengthening USD and good macroeconomic reports. Treasury bond yields have also risen and are motivating investors to buy the USD. The latest reports from the US signal an improvement in inflation processes and in retail sales. Industrial sales and production activity indices are also higher than expected. Despite this, we observe a strengthening of the NZD for the second day in a row, given the risk appetite of investors these days.
Next week the RBNZ is expected to meet. Most likely, the rate will not change; the regulator will stay true to its plans to leave the rate unchanged until 2024. At the same time, investors expect the RBNZ to change its rhetoric regarding the reduction of the rate and improve its economic forecasts, considering the latest macroeconomic reports indicating a strong economic recovery.
We believe that further growth of the rates will be limited. Right now the NZD is trading at the highs of 2017, and nevertheless, there is a potential for growth. Most technical analysis tools are also committed to the deals to BUY, which motivates us to choose such trades today.
