NZD/USD: Opportunities to re-enter long positions at around 0.60 – ANZ
|Some weakness will bring opportunities to reset long trades in the NZD/USD pair at 0.60 while economists ANZ Bank has updated kiwi’s forecast to 0.65 for the rest of the year.
Key quotes
“Despite having re-opened the domestic economy, beyond an initial bounce-back, the New Zealand economy remains vulnerable to a weak global demand and no international tourism. Although the hole in GDP is likely behind us, the full economic impact of the recession will become clear over the rest of 2020.”
“The NZDs outperformance alongside other risk currencies has been tempered by a dovish central bank. We think this dovishness will linger, as the RBNZ eventually increases its large-scale asset purchases and toys with unconventional policy measures such as negative rates and the purchase of foreign bonds.”
“Against the JPY and the USD we expect consolidation and tactical retracement to offer opportunity for entry given the improved global backdrop.”
“To reflect a more balanced outlook, we have lifted our NZD/USD forecast to 0.65 for the remainder of 2020, recognising the role of liquidity and fiscal support in limiting downside to the global story.”
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