Share:

High beta currencies, like the Australian Dollar and the New Zealand Dollar, tend to fare badly when markets are risk off. However, the NZD is one of the worst-performing currencies during a recession. Bloomberg reports that JPMorgan looked back at the last 40 years and found that the NZD tends to perform very badly around a recession and worse than the AUD.

Chart

 

Latest New Zealand GDP numbers

Last week New Zealand GDP came in lower than expected with the Q4 reading at 2.2% vs 3.3% expected. The slower growth outlook means that the RBNZ will be seen as less likely to hike rates and that is an extra headwind for the NZD.

Chart

 

From an index level, the NZD has fallen into a near-term support region which will be crucial for the NZD’s direction. The NZD is also around the lowest levels it has been for this year as US recession fears increase. Watch this key support level marked as a break of this region opens up more technical downside.

Chart

 

The narratives to watch

If the prospects of a US hard landing grow, watch for further bank risk to increase expectations of a US recession, then the USD could find some strength. That could weaken the NZDUSD pair. This is why Morgan Stanley is currently projecting a move down to 0.5800 for the NZDUSD. Watch the price around the 100 and 200 EMA on the daily chart to get a sense of the technical direction of the pair moving forward.

Chart


Learn more about HYCM

Share: Feed news

High-Risk Investment Warning: Contracts for Difference (‘CFDs’) are complex financial products that are traded on margin. Trading CFDs carries a high degree of risk. It is possible to lose all your capital. These products may not be suitable for everyone and you should ensure that you understand the risks involved. Seek independent expert advice if necessary and speculate only with funds that you can afford to lose. Please think carefully whether such trading suits you, taking into consideration all the relevant circumstances as well as your personal resources. We do not recommend clients posting their entire account balance to meet margin requirements. Clients can minimise their level of exposure by requesting a change in leverage limit. For more information please refer to HYCM’s Risk Disclosure. *Any opinions made in this material are personal to the author and do not reflect the opinions of HYCM. This material is considered a marketing communication and should not be construed as containing investment advice or an investment recommendation, or an offer of or solicitation for any transactions in financial instruments. Past performance is not a guarantee of or prediction of future performance. HYCM does not take into account your personal investment objectives or financial situation. HYCM makes no representation and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast, or other information supplied by an employee of HYCM, a third party, or otherwise. Without the approval of HYCM, reproduction or redistribution of this information isn’t permitted.

Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended Content


Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended Content

Editors’ Picks

EUR/USD bounces from 1.0800 in the US afternoon

EUR/USD bounces from 1.0800 in the US afternoon

EUR/USD lost its bullish momentum and declined toward 1.0800 in the second half of the day on Thursday. The upbeat Jobless Claims and February PMI data from the US helps the US Dollar find demand and weighs on the pair.

EUR/USD News

GBP/USD drops below 1.2650 as USD rebounds

GBP/USD drops below 1.2650 as USD rebounds

GBP/USD reversed its direction and declined below 1.2650 after rising above 1.2700 earlier in the day. Renewed US Dollar strength on the back of better-than-forecast Jobless Claims and upbeat PMI data makes it difficult for the pair to keep its footing.

GBP/USD News

Gold challenging the $2,020 mark

Gold challenging the $2,020 mark

Spot Gold eased from a fresh multi-week high of $2,034.86. The US Dollar edged sharply lower during Asian trading hours and remained on the back foot through most of the European session but turned higher ahead of Wall Street’s opening. 

Gold News

XRP price declines with developments in SEC v. Ripple lawsuit

XRP price declines with developments in SEC v. Ripple lawsuit

XRP price dropped below $0.55 on Thursday as both Ripple and SEC work on remedy-related briefs. March 13 is the next key deadline for the SEC v. Ripple lawsuit.  

Read more

Nvidia drives global markets to records, as European stocks defy German economic gloom

Nvidia drives global markets to records, as European stocks defy German economic gloom

Markets are a sea of green after Nvidia’s earnings report has boosted global risk appetite and stock markets surging. Boost to Nvidia’s share price after another monster earnings report and super forecast has led to a collective relief rally across markets.

Read more

Majors

Cryptocurrencies

Signatures