Forex Flash: NZD/USD targets 0.8130 for week ahead – Westpac
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NZD/USD
FXstreet.com (Barcelona) - According to the Westpac Research Team, "We adopt a negative bias for the week ahead, targeting the level 0.8130 for the NZDUSD - extreme long positioning in the NZD is offset by a negative backdrop for the USD, although near-term technical momentum is now negative."
In terms of NZ swaps, we switch to a negative bias for the week ahead, driven by the breakdown of the key 2.65% level for the 2yr last week. "Unless Eurozone officials surprise by activating the ECB's bond buying plan soon (most likely as part of a Spanish rescue), NZ interest rate markets will nudge towards pricing in an OCR cut." the team adds.
After a significant flattening of the NZ curve since late September, the curve is again consolidating: the 2-10yr swap curve reached 93bp historical support, but rebounded late in the week to 100bp as sentiment improved. "We will stick with our medium-term flattening bias as long as 105bp holds." they suggest.
In terms of NZ swaps, we switch to a negative bias for the week ahead, driven by the breakdown of the key 2.65% level for the 2yr last week. "Unless Eurozone officials surprise by activating the ECB's bond buying plan soon (most likely as part of a Spanish rescue), NZ interest rate markets will nudge towards pricing in an OCR cut." the team adds.
After a significant flattening of the NZ curve since late September, the curve is again consolidating: the 2-10yr swap curve reached 93bp historical support, but rebounded late in the week to 100bp as sentiment improved. "We will stick with our medium-term flattening bias as long as 105bp holds." they suggest.
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