NZD/USD: Short term stagnation before trending up in the later part of the year – CIBC
|The NZD has declined against most G10s since the RBNZ surprised the markets a few weeks back. Economists at CIBC Capital Markets analyze Kiwi's outlook.
Stagnating NZD
We anticipate short term stagnation in NZD/USD, before the pair trends up in the medium term due to broad USD weakness.
The dovishness of the RBNZ should keep expectations for any further hikes tempered, even if other central banks resume their hiking cycles. This dynamic should spill over to NZD's weakness against G10 currencies.
Over the medium term, New Zealand's terms of trade should hold up better than its key trading partners. Our expectation for relative strength in terms of trade should allow the NZD/USD to appreciate in the later part of this year and into 2024.
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