Sellers of the US Dollar (USD) are loving the recent drop in the New Zealand Dollar (NZD) as it retreats to a fresh low of 0.6315 as I write. This marks 7 weeks of underperformance as global risks filter to the surface in a big way. The Federal Reserve hiked rates last week as they try to reign in massive inflation, they will hike again in the June meeting which will slow growth prospects and slow the economy. We express concerns over “risk” assets such as the NZD as further Fed hikes will have a serious impact on world economies bringing about recessions. Amid concerns, were higher April inflation expectations with polls suggesting a rise to 3.9% in 3 years from 3.7% in the March survey. Meanwhile US consumers are worried about rising house affordability and rising lending rates as sentiment towards housing hits a 2 year low with most believing it’s a troubled time to buy a house. Key data this week is in the form of NZ Inflation expectations Thursday. We think the kiwi has more downside bias over the remainder of the week.
Current Level: 0.6290
Last Weeks Range: 0.6390-0.6565