Based on our sense of positioning, excessively bearish sentiment, and risks that the economy does not slow as rapidly as hoped, we see greater upside potential for New Zealand dollar than further downside in the next month or two.
This number is quite a shock. This is a short-term negative for the currency and I'm surprised it hasn't fallen further.
The market has been trading on the hurricane news.
The market is currently factoring in rate hikes toward the end of the year of as much as 50 basis points. That's about right, considering the kind of strong economic numbers we have got out of Japan.
The sharp rally in the yen last week may not last. There is chatter about an impending policy tightening by the BOJ, but this is still around six months away at least.
The RBNZ has been talking the currency down for over a year and certainly won't discourage further falls. A negative trend in the currency has taken hold and the presumption that the economy will struggle this year, without a much lower currency, will keep it trending lower.
Interest rate expectations will continue to support the Australian dollar.
Against that, the market has started thinking about rate hikes in Europe in the first quarter of next year. That is going to prevent a large fall in the euro.
Strong cyclical equities are often associated with greater global growth confidence, risk-seeking behavior and a stronger Australian dollar.
The Australian dollar has underperformed because there is a feeling it's past its best days in terms of a high-yielding currency.
