Barclays Trade Of The Week: Sell NZD/USD Into RBNZ Meeting

Currency investors should consider selling NZD/USD into the RBNZ meeting this week, advises Barclays Capital in its weekly FX pick to clients. The trade is macro-technical driven.

On the macro-front, Barclays' rationale is as follow:

"We recommend a short NZDUSD trade going into the RBNZ meeting on 9 December 2015, given our economists’ view that the RBNZ is likely to deliver a 25bp cut. The market is only pricing in a 40% probability of a 25bp rate cut, and we think the NZD will likely sell off if RBNZ indeed eases. RBNZ may express discomfort with the recent strengthening of the NZD TWI, and could talk down the currency by warning of more rate cuts if the NZD strengthens further," Barclays argues.

On the technical-front, Barclays' rationale is as follow:

"From a technical perspective, we are overall bearish NZDUSD and would prefer to use upticks within range as an opportunity to sell at better levels. Nearby selling interest is expected in the 0.6800 area, with a confluence of resistance near 0.6900 helping to keep the greater focus lower. A move below 0.6430 would encourage our bearish view towards initial targets near 0.6215. Our greater downside targets are in the 0.5900 area," Barclays adds.

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