NZD/USD to extend the rise beyond 0.6620 – Westpac

NZD/USD is on the rise following Prime Minister Jacinda Ardern's impressive victory in New Zealand's general elections. Economists at Westpac have a slightly positive bias due to clear election result and see potential for gains beyond 0.6620. 

See – New Zealand election: Jacinda Ardern's Labour Party scores landslide win

Key quotes

“NZD/USD has so far shown a very modest +15 pip reaction to the landslide win by Labour in the NZ general election. Perhaps that is due to pre-election polls which indicated Labour was well ahead of National, which means a comfortable Labour win was already priced into the NZD. In addition, Labour did not campaign on any major new policies.” 

“There’s potential for further modest gains during the day ahead, beyond 0.6620. The multi-month outlook remains positive, with potential to rise towards 0.6800 – the top of a multi-month range.” 

“Medium supports include elevated global risk sentiment, a weak USD trend, and NZ economic outperformance. The main medium-term negative is the dovish Reserve Bank of New Zealand, but we note that NZ-US yield spreads have weakened in influence this year.”