- Jason Attewell of Statistics New Zealand
New Zealand currency is poised to approach a record high set in August 2011 even despite retreating amid profit taking and with some investors considering earlier gains excessive. The kiwi can test 88.43 level against the U.S. Dollar, the strongest level since 1985. Amid risk appetite due to Vladimir Putin's speech and extremely strong fundamental data from New Zealand, NZD/USD can refresh a record high soon. At the same time, Desmond Chua, an analyst at CMC Markets, believes that the currency can lost around 2.5% from today's level, as kiwi's 14-day relative-strength index soared to 77 on Tuesday, indicating the currency soared 6.9% since the beginning of February. Hedge funds all over the world increased their bullish bets on the kiwi; however, in a shorter-term a correction is needed before another rally to the upside.
Fundamental data from New Zealand continue surprising markets to the upside, with trade gap shrinking to $1.43 billon in the final quarter of 2012, a figure equal to 3.4% of the nation's GDP. Another surge in dairy exports means that New Zealand logged its smallest seasonally-adjusted current account shortfall since March 2010. At the same time, country's net international liability position plunged to $147.6 billion from $149.5 three months earlier. All these figures are solidifying the view, the Reserve Bank of New Zealand will continue sounding hawkish, with more rate hikes on the horizon.
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