Morgan Stanley is bearish on NZD/USD and expresses that via maintaining a short position from 0.8150 in its portfolio. The trade has a target at 0.7650, and a revises profit-stop at 0.80.
"With global commodity prices in freefall and disinflationary pressures rising globally, it’s no surprise that inflation in New Zealand was below expectations. What’s more, much of the upside in the print was due to higher housing prices," MS says a rationale behind this call.
"Macroprudential tools are already policymaker’s instrument of choice for dealing with housing imbalances, suggesting that there would be limited upside risk to rates from increased housing prices. As a result, we would expect the RBNZ to send a dovish tone at its upcoming meeting,'" MS adds.
"We believe NZD/USD is likely to remain sold and maintain our short position," MS advises.
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