NZD/USD to remain within 0.65-0.69 with downside risks - BNZ
|Analysts at BNZ, trimmed their NZD optimism for the second half, given the escalation of US-China trade wars. They now see NZD/USD as largely confined within 0.65-0.69, but with downside risk still lingering over the short-term.
Key Quotes:
“Our NZD projections have been unusually stable, being unchanged over the past six months, even as we have recently highlighted some prevailing downside risk. We trim 1½-2 cents off our 2H19 projections, taking the average down to 0.6750, consistent with a view that the NZD largely trades within a 0.65-0.69 range.”
“Our projections for an NZD recovery over the second half, originally formulated late last year, were predicated on a generalised downturn in the USD alongside an easing in US-China trade tensions. We now abandon our assumption that US-China trade wars will be settled anytime soon.”
“The greater risk is that Trump imposes tariffs on the remaining $325bn of Chinese imports than removing recently imposed tariffs, to which China would respond with further retaliation. Since the trade war ramped up in Q2 last year, NZD performance has been closely linked to CNY. If the PBOC allowed USD/CNY to break above 7 – not currently part of our central view – then the NZD could easily sustain a clear break of USD0.65, putting last year’s low of 0.6425 under threat.”
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.