NZD/USD slid below the 0.69 mark, opening the door for a correction. Still, economists at Westpac expect the kiwi to enjoy further gains towards the 0.70 level. Potential for this minor reversal to reach 0.6875 before resuming the two-month-old rally beyond 0.7000. The commodity price trend remains upward – a powerful source of support for the NZD.
Potential to soar above 0.71 by June
Longer-term, we target 0.7100+ by June. The RBNZ clearly has more work to do to claw back inflation expectations, and NZ meat and dairy prices, in particular, have further upside.