The New Zealand dollar is forecast to trade above 0.60 against the US dollar in the second half of 2026, according to ING’s FX Strategist Francesco Pesole. He anticipates the Reserve Bank of New Zealand will maintain a hawkish stance when it holds rates at the upcoming 27 May meeting, though he cautions that markets are underestimating the possibility of a surprise rate increase. Pesole expects new economic projections from the RBNZ to signal monetary tightening beginning in the third quarter of this year, with his base case calling for two consecutive 25 basis point rate hikes starting in July.
This contrasts with current market pricing, which appears too dovish on the RBNZ’s trajectory. Traders holding short NZD positions may face pressure if the central bank delivers on this hawkish outlook. The kiwi dollar could see near-term volatility around the May meeting and subsequent monetary policy decisions through year-end.
FXnCO Insight
Consider reducing bearish NZD exposure ahead of the 27 May RBNZ meeting, as markets may be mispricing upside rate risk.
Source: FXStreet