Imre Speizer, Senior Market Strategist at Westpac, suggests that the markets appear to have intensified their betting that the RBNZ will cut the OCR this year, following a slump in business confidence and inflation expectations. Key Quotes “NZD/USD remains stuck in its multi-week range of 0.6550- 0.6750 although recent signs point to a test of the downside ahead. Recent NZ data for inflation expectations and business confidence has intensified market expectations for RBNZ easing, while US data has caused a market repricing of the Fed’s tightening cycle. We expect 0.6660 to be tested this week. 3 months: We expect NZD/USD to be lower by mid-2016, targeting 0.62. Our main argument is that the Fed should raise US interest rates further this year but markets have priced in no hike until 2017. We expect US data momentum to positively surprise markets, pushing US interest rates and the USD higher. In contrast, the RBNZ should ease twice this year, but markets have fully priced in only one cut. 1 year: Our 1 year ahead forecast is 0.61, based partly on the OCR being cut by another 50bp to 2.0% and the Fed rate to rise further from 0.375% this year.” For more information, read our latest forex news.