Barclays Capital FX Strategy Research sees a broadly flat profile for NZD/USD through the end of the year mainly on the ground of pricing a neutral RBNZ bias.
“Strong inward migration is supporting domestic activity and lifting business sentiment, but also adding to labour supply and dampening wage pressures. Core inflation and inflation expectations have picked up from low levels. Dairy prices have stabilized, and we do not expect a sharp fall in prices to the lows of 2015.
However, policy uncertainty for the country is set to rise, with a general election scheduled for September 2017, while RBNZ Governor Wheeler will also step down in the same month. Although economic activity and sentiment remain buoyant, subdued wage and price pressures have been dampening expectations of an early rate rise,” Barclays argues.
In line with with view, Barclays expects NZD/USD to trade in an average range around 0.74 into year-end.
Source: Barclays Research
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