Economists at Westpac expect kiwi’s January decline to continue to 0.6600, following NZ-US yield spreads which have been depressed by a more hawkish Federal Reserve and repricing.

Fed rate hikes to outpace market pricing

“While NZ’s economic data pulse should remain positive, the Fed-driven USD will dominate. NZ-US yield spreads have declined recently, with the RBNZ fully priced but the Fed arguably underpriced.”

“Multi-month, we remain bearish, targeting sub-0.6600. Our view is that the US dollar will outperform most currencies over the next few months as Fed rate hikes outpace market pricing.”