NZD/USD is a little higher this morning after having experienced the biggest correction since the current rally started just over a week ago. Still, economists at ANZ Bank expect the kiwi to continue its march forward underpinned by several factors.

Kiwi sees a rebalancing rather than the start of a fresh downtrend

“This correction has really been an AUD and NZD one as markets fade the spectacular rallies seen on crosses like NZD/EUR and NZD/JPY. At this stage it looks more like a rebalancing rather than the start of a fresh downtrend.”

“We still think the NZD will benefit from higher interest rates, affirming both carry and confidence in the RBNZ’s inflation credentials.”

“Amid rising global inflation, it’s logical that the NZD should strengthen, softening the blow.”