By Swati Pandey
SYDNEY (Reuters) - Foreign exchange analysts had been expecting the New Zealand dollar to strengthen during the course of a year, according to a Reuters poll, but were caught off guard as the country's dovish central bank sent the currency careening off its stubborn trading range this week.
The survey of 34-38 analysts, conducted in the week ahead of the Reserve Bank of New Zealand policy meeting on Thursday, predicted the kiwi
The kiwi, which had been trading in a $0.6750-$0.6950 range since mid-June, plunged to a near 2-1/2-year low after the RBNZ left the door ajar for a rate cut.
The kiwi was last at $0.6587, a level not seen since February 2016.
Only one bank - ING - predicted the kiwi at $0.6500 between one and three months, but it expects the currency to rise to $0.7500 in a year's time. Monex Europe and ANZ were among those forecasting losses for the kiwi over a 12-month horizon.
"We think conditions are ripe for the NZD to ... remain under selling pressure through the rest of this year," said Phil Borkin, senior macro strategist, ANZ.
"And, as the market grapples with the idea that the RBNZ is going to be extremely late to the monetary policy tightening party, and may not show up at all, then that could see the NZD undershoot where some of our current fair value models suggests it should reside."
Analysts also predicted small future moves for the Aussie, which currently sits near an eight-month trough of $0.7318.
The median forecast of 40-50 analysts puts the Aussie at $0.7400 in one month, $0.7425 in three months, $0.7600 in six months and $0.7700 over a one-year horizon.
The predictions are barely changed from last month when fears of a global trade war had rattled investors and even as the U.S. dollar pulled up on generally strong economic indicators.
The Aussie has so far fallen 6.5 percent this year, whereas the kiwi has suffered a more than 7 percent drop.
Easy monetary policies in Australia and New Zealand at a time when the U.S. Federal Reserve is on a tightening path further adds to the bearish case for the antipodeans.
The Reserve Bank of Australia (RBA) left rates at a record low of 1.50 percent since August 2016, and given a clear signal that the policy will remain accommodative for a while.
Still, analysts generally expect the Aussie to do better than the kiwi, going forward. The RBA Governor Philip Lowe reiterated this week that the next move in interest rates was up, not down while the RBNZ has signaled rates could go lower.
"This week's events have increased the chances that interest rates in Australia will rise a bit earlier than we expected and that rates in New Zealand will rise a bit later," said Paul Dales, chief economist, Capital Economics.
"That gives us more confidence that the kiwi dollar will weaken more than the Aussie dollar."