In the view of economists at Westpac, it is unclear whether the NZD’s decline since April has bottomed. A break below 0.6217 would open up the 0.61 level.

Yield spreads should favour NZD next week

“NZD/USD made a tentative bottom at 0.6217 on 12 May – whether it holds during the week ahead is unclear. A break below that level would then target 0.61.”

“The NZD has closely followed risk sentiment via the equity markets during the past few weeks, so much will depend on outcomes there.” 

“Yield spreads should be in the NZD’s favour next week, if the RBNZ hikes by 50bp and increases its OCR track by as much as we expect.”