Forex Flash: Several drivers explain depreciating NZD/USD forecast – BNZ
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NZD/USD
FXstreet.com (Barcelona) - "There is sufficient uncertainty and risk clouding the global outlook of the NZDUSD as to make us a little nervous about hanging a year-ahead currency forecast off of it." warns Research Analyst Mike Jones at BNZ.
Moreover, as can be from recent data, the NZD and trading partner growth can diverge - such was the case in both 2000 and 2006. On both of these occasions, a sharp widening in NZ's current account deficit helps square the circle of why the currency underperformed despite buoyant world growth. "A similar scenario may well play-out next year given we expect NZ's current account deficit to widen from circa-5% of GDP to almost 7%. Indeed, this widening is a key driver behind our forecast depreciation in the NZDUSD." notes Jones
"All of this being said, we still caution that, whatever your view of the NZ economy and whether or not the RBNZ will cut the OCR, the global backdrop is shaping up as a potentially big support for the NZDUSD in 2013. We'll be keeping a close eye on the partial data to assess the reasonableness of the expected global pick-up. It may yet keep the NZDUSD stronger for longer." he adds.
Moreover, as can be from recent data, the NZD and trading partner growth can diverge - such was the case in both 2000 and 2006. On both of these occasions, a sharp widening in NZ's current account deficit helps square the circle of why the currency underperformed despite buoyant world growth. "A similar scenario may well play-out next year given we expect NZ's current account deficit to widen from circa-5% of GDP to almost 7%. Indeed, this widening is a key driver behind our forecast depreciation in the NZDUSD." notes Jones
"All of this being said, we still caution that, whatever your view of the NZ economy and whether or not the RBNZ will cut the OCR, the global backdrop is shaping up as a potentially big support for the NZDUSD in 2013. We'll be keeping a close eye on the partial data to assess the reasonableness of the expected global pick-up. It may yet keep the NZDUSD stronger for longer." he adds.
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