NZD/USD: Nearing a potential trough – BNZ
According to the NAB FX Strategy Team, the New Zealand Dollar’s downturn might be drawing to a close. Their three to six month target for the NZD/USD pair is at 0.6150.
Key Quotes:
“The NZD inevitably performs poorly during economic downturns and global economic momentum remains to the downside. Easier global monetary policy currently underway and a trade war truce might be enough to stabilise growth and even engineer a modest recovery, which explains our more positive NZD outlook for next year. Despite the soft global backdrop, NZ commodity prices are holding up well and are NZD-supportive.”
“Domestic factors remain largely NZD-negative, with low levels of confidence widely evident and GDP growth on a weaker, sub-trend path. Further RBNZ rate cuts look inevitable, although these are well-priced.”
“Our 3-6 month target for the NZD remains at 0.6150, with two-sided risks, mainly emanating from the global economic outlook. If economic growth momentum remains to the downside and the trade war re-escalates then that would raise the chance of a sub-0.60 handle for the NZD seen typically under global recession-like conditions. On the positive side, more encouraging developments in the trade war and a turnaround in global growth would inject some life into the NZD and at the same time trigger a broadly-based reversal in the USD, adding to potential NZD/USD gains.”
Author
Matías Salord
FXStreet
Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.
