NZD seen higher by year-end – TDS

FX Strategists at TD Securities expect the Kiwi Dollar to gain further ground towards the end of the year.

Key Quotes

“While an out-of-consensus view, we expect a break in the RBNZ's messaging later this year. No matter who forms government there is fiscal stimulus in the pipeline and along with Spencer's hawkish leanings, we see the RBNZ abandoning Wheeler's dovish hold view expressed to date. We look for a step up in hawkish rhetoric with the November Monetary Policy Statement. If not, we will review TD’s call for a hike in Feb 2018”.

“We have lifted our NZD profile to reflect refreshed USD weakness. Recent NZD underperformance has been due to ongoing RBNZ neutrality under Wheeler as well as election uncertainty as to what parties form a coalition government. We see the RBNZ turning up the rhetoric in final weeks of 2017, sparking fresh NZD outperformance and AUDNZD briefly sinking towards 1.05”.