New Zealand Dollar: Seen above 0.60 against US Dollar in 2H26 – ING

§ 01 Executive Snapshot

• What: ING forecasts New Zealand Dollar (NZD) to rise above 0.60 against the US Dollar in the second half of 2026.
• Who: ING’s FX Strategist Francesco Pesole, Reserve Bank of New Zealand (RBNZ).
• Why it matters: The NZD outlook is closely tied to anticipated RBNZ rate hikes and global economic conditions, indicating broader implications for currency markets.

§ 02 Key Developments

• ING anticipates two 25 basis point hikes from the RBNZ starting in July 2026.
• Swap market pricing indicates 21 basis points for July and 75 basis points by year-end.
• Current forecast includes 50 basis points of tightening in 2026, contingent on energy market dynamics.

§ 03 Strategic Context

• The RBNZ has historically adopted a cautious approach, often erring on the dovish side, which influences market expectations.
• The NZD's performance is heavily influenced by external factors, including global risk sentiment and US Federal Reserve rate expectations.

§ 04 Strategic Implications

• Immediate market consequences include potential upward movement in NZD as RBNZ signals tightening.
• Long-term implications could see NZD/USD return above 0.60, contingent on geopolitical stability and central bank policies.

§ 05 Risks & Constraints

• Potential risks include unexpected geopolitical developments in the Middle East that could impact global sentiment and currency valuations.
• The effectiveness of RBNZ's communication and market pricing may face challenges if external conditions shift unexpectedly.

§ 06 Watchlist / Forward Signals

• Key upcoming signals include the RBNZ's meeting on May 27, where rate decisions and projections will be clarified.
• Monitoring global economic conditions and US rate decisions will be critical to gauge the NZD's performance trajectory.