The NZD/USD currency pair retreated from its multi-year high on Friday, as kiwi took a break from the recent rally; however, the outlook is still bullish as the currency continues trading higher on further rate hike speculation and fears of Chinese government action. The New Zealand Dollar's index soared to its all-time high last week. The pair moved above 0.86 level, that was previously reached in April 2013 before the central bank intervened and knocked the exchange rate sharply. Other crosses with the kiwi hit its multi-year highs as well, with NZD/JPY trading at the highest since 2007, while versus the Euro kiwi soared to its 2013 peak. The main reason for such a solid performance is the fact investors have already started to price in upcoming rate hikes, after RBNZ Deputy Governor Grant Spencer claimed the monetary policy tightening cycle can be more accentuated. He also pledged to remove limits on low-deposit home loans as soon as the property market pressures have moderated. Another fact that is adding more pressure on the central bank is the Christchurch rebuild, which is pushing the inflation rate higher. Spencer also mentioned that the nation's exporters have adjusted to the stronger currency. The kiwi has also received a leg up after a positive trade balance, while speculations the People Bank of China will pull the trigger soon also kept market sentiment in the positive territory. This week, due to a lack of fundamental news from New Zealand, the currency can lose some of its earlier gains.
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