The Kiwi Dollar is now poised to move into a consolidative theme vs. the greenback, noted FX Strategists at UOB Group.
24-hour view: “We expected a higher NZD yesterday but were of the view that “a sustained break above 0.6590 is not expected”. NZD subsequently surged to a high of 0.6590 but the up-move was short-lived. Despite the rapid pull-back from the high, the underlying tone is still firm and the downside risk appears to be limited. NZD is more likely to consolidate and trade sideways for now, expected to be within a 0.6550/0.6600 range”.
Next 1-3 weeks: “While we expected a lower NZD, we highlighted in recent updates that “we are not convinced that the current weakness can move below 0.6475 in a sustained manner”. That said, the sudden overnight surge was unexpected as NZD hit a high of 0.6565. While there is no change to the current neutral outlook, the 0.6501 low registered on Tuesday (11 Sep) is deemed as a short-term bottom. From here, NZD is expected to trade sideways to slightly higher, likely within a 0.6520/0.6615 range”.