NZD/USD to trend lower in long term

Beyond the two additional cuts which are expected this year, more evidence of a softer terms-of-trade should maintain a weaker activity and employment outlook, and should keep the RBNZ with a neutral/soft dovish bias. 

"Over the longer horizon the profile for NZD/USD is veiwed as steadily weaker, and  AUD/NZD should trend higher into 2016", says RBC capital markets.

Capital flows are one reason for support to NZD considering New Zealand is the highest-yielding currency in G10 and will remain that way even after two more cuts, however, the country's small bond market makes it difficult for global investors to pour money into NZ. 

That means there is a limited scope for unhedged FI flows to support NZD, as they do for example with AUD. Moreover, further out, NZ yields should look less attractiveas the interest rate gap between other G10 economies narrows.