NZD/USD has continued its journey south. Economists at ANZ Bank expect the kiwi to remain under pressure as the market believes that the Reserve Bank of New Zealand (RBNZ) is near the end of the tightening cycle.

A risk-off vibe/flight to safety may keep the USD supported

“The USD looks to be garnering support from ongoing hawkish Fed rhetoric (and consequent realisation that interest rates will likely need to remain higher for longer), alongside an uneasy sense that this could be a bumpy road, which is feeding flight-to-safety motivations.”

“We now expect the Fed to keep up with the RBNZ with three more 50 bps hikes this year; that too is erasing what many have long felt was almost an automatic birth right for the kiwi.” 

“We don’t buy into the idea that the RBNZ is near the end of the tightening cycle, but the market does, and in recent days that has been a weight on the kiwi.”