Last year, NZD/USD was one of the strongest currency pairs, which pleased investors with a solid income. This year we see a decrease to 8.9%. A weak downtrend has formed due to the strengthening of the USD and the weakening of the positions of commodity currencies. In the second half of 2021, the NZD found itself in an even more difficult situation because a new wave of the coronavirus pandemic threatens the world with new lockdowns and puts pressure on the global economy, while China is going through an economic downturn.
The last 30 days turned out to be the most successful for the NZD: it was able to recover to a 3-month high. The growth in the trade surplus of China due to the steady growth of exports and imports revived investors' interest in risky assets, but not for long: the growth rate of industrial production as well as retail sales in China are below investors' expectations. The New Zealand Institute of Economic Research has revised down its forecasts for the GDP and inflation in New Zealand. Under these conditions, the RBNZ will not be able to revise its stimulating monetary policy.
The USD, in turn, further strengthened its position due to good macroeconomic reports. Investors estimated the strongest growth in producer prices in 11 years, which led to an increase in Treasury bond yields and motivated investors to buy the USD.
Investors are still waiting for the quarterly GDP report of New Zealand this week, as well as data on retail sales in the US and the weekly report on the labor market. We believe that the US currency has more chances in the confrontation with the NZD and after a price correction, the rate will continue moving downward. Therefore, our choice for today are the deals to sell.
