NZD in sell-any-rally mode – ANZ

According to the analysts at ANZ, with the Fed now firmly hiking and debate over the pace of upcoming hikes intensifying, and the ECB more neutral, the drivers of the liquidity cycle are shifting which should keep the USD in the box seat and the NZD in sell-any-rally mode.

Key Quotes

“However, we do need to acknowledge that the recent USD rally has petered out, which we suspect means we will need to see the commodity complex give way and four-hike sentiment towards the Fed to firm for movements to accelerate again. Neither are our central scenarios, though we believe a turn in the commodity complex is a key risk.”

“A reasonable domestic pulse is expected to keep the NZD supported against non-USD crosses. The extent of NZD/AUD’s retracement has caught us by surprise but with the inflation cycles in the NZD’s favour we expect this cross to recover lost ground.”