Yield demand for the New Zealand dollar appears to remain unquenched.
Any sign of softening will see markets bring forward expectations of rate cuts. Tough talk on interest rates may provide further opportunities to sell New Zealand dollars.
The sticking point for the Reserve Bank is still inflation. It is likely to be September before the bank is comfortable that pressures have dissipated enough.
The labor market data is expected to record some deterioration. This will keep the New Zealand dollar on the defensive.
Market pricing has shifted to a September-December start to the easing cycle. The New Zealand dollar should consolidate further.
A launching pad was established for the New Zealand dollar to rally. Offshore and local buyers were looking for something with a five in front.
It is difficult to see the New Zealand dollar stage any kind of sustainable rally. Data is likely to portray softer growth than the Reserve Bank's projections.
U.S. dollar weakness will see the New Zealand dollar test higher levels. With the prospect of less support from interest rates, the U.S. dollar fell across the board.