CBA Look For NZD/USD to Fall Below $0.60 Come Year End

CBA write “yesterday’s 50bp hike from the RBNZ takes the OCR to 5.25%, the highest of all the major economies that we track. Our ASB colleagues have added a final 25bp hike to their forecasts which will take the official cash rate to 5.50% in May. Although they note that it will likely be a line ball call between a 25bp hike and leaving interest rates unchanged.”

• “Wider interest rate differentials between NZ and the U.S. are a support for NZD/USD in the short term. However, the extent of tightening delivered by the RBNZ is large and interest rates are well and truly in restrictive territory. Our colleagues at ASB are forecasting a recession in NZ in 2023. A weak NZ economy, alongside a slowdown in the global economy can ultimately weigh on NZD/USD. We forecast NZD/USD to fall to around $0.59 by the end of 2023.”