NZD: Expected to drift lower on a Trade Weighted Basis - BNZ
|According to the NAB FX Strategy Team, the NZD could move lower on a Trade Weighted Basis and rose modestly versus the US dollar, if there is not any serious economic shock.
Key Quotes:
“New Zealand is vulnerable to an offshore shock. Trading partner growth is slowing and inflation indicators (particularly amongst emerging markets) are weak. In the event of a serious deterioration adversely impacting asset prices, activity and commodity returns, New Zealand would suffer the consequences. But barring that eventuality, the domestic economy looks well positioned for a further period of expansion only held back by capacity constraints and slowing population growth. Given that the pace of expansion should be sufficient to maintain near-full employment and inflation at target, there will be no pressure on the RBNZ to move its cash rate any time soon. The NZD will suffer if global activity stumbles but remain well supported if not.”
“The New Zealand Dollar is expected to drift lower over the next twelve months, on a Trade Weighted Basis. A modest increase against the USD is expected to be offset by relatively significant declines against the Euro and Pound. Implicit in this is our assumption that worst case scenarios have been priced in for the UK and Europe and that trade tensions between China and the US will ease.”
“If, on the other hand, there is a serious economic shock offshore, and that elevates global risk, then a much weaker New Zealand dollar trajectory might be expected, especially against the USD.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.