Barclays Research discusses NZD/USD outlook and adopts a constructive bias over the long term.
"We expect NZDUSD to gain marginally in H2 2021 before accelerating in 2022, supported by the improving macro outlook and rising risks of an earlier start to policy normalisation by the RBNZ. Higher US real rates amid the Fed’s hawkish turn will likely cap NZD gains in the short-term. However, growth has been surprising positively and the RBNZ expects the output gap to turn positive in Q1 22," Barclays notes.
"The RBNZ’s May MPS forecasts, including the reinstated OCR track, will likely keep policy normalisation risks elevated unless data deteriorates sharply. Normalisation risks appear well priced but RBNZ balance sheet expansion ending at a lower level and rate hike risks should support the NZD. We expect the NZD to outperform the AUD over our forecast horizon, based on relative monetary policy outlooks," Barclays adds.