Flash: NZD/USD at the crossroads – BNZ

FXstreet.com (New York) - The NZD was the weakest performing G10 currency last week – after opening the week flirting with the upper end of the 0.7690-0.8150 range, the NZD/USD finished the week some three cents lower around 0.7800, notes Mike Jones, an analyst at BNZ.

Key quotes

“A sharp and unexpected depreciation in emerging market currencies was the most eye-catching development in markets last week. The NZD’s role as a liquid regional proxy for Asia saw the NZD/USD dragged lower on the coat tails of the INR, IDR, THB, and PHP.”

“For this week, direction for the NZD will continue to come from offshore. There is now only four weeks to go until the September 18 FOMC meeting in which the Fed is expected to pull the QE ‘tapering’ trigger.”

“A September taper still looks the most likely outcome to us, but any surprises from this week’s US data (durable goods orders, Q2 GDP, and consumer confidence) and Fed speak (Bullard, Lacker, and Williams) will provide an opportunity for investors to reshuffle their bets. The risks are probably tilted towards a delay in the tapering start date – this was certainly the message from Friday’s terrible home sales data.”