The NZD is the best performing G10 currency in a one-month view, rising about 3% vs. the USD in this time frame. On the back of the better economic data, economists at Rabobank have revised up the forecast for NZD/USD. However, they continue to see risk of a decline in global risk appetite weighing on the kiwi in the coming months.
“Overall, the outlook for New Zealand and its major trading partners has improved in the coming months and this should afford the NZD some support. That said, risks remain. The possibility of negative rates from the RBNZ remains on the table dependent on how the economy fares in the coming months, while the broader outlook for risk will depend on issues such as US/China tensions and potentially issues around the US election.”
“Not only will US suspicions of China remain irrespective of who wins the US presidential election, but there is the possibility of an contested outcome, social unrest in the US and fears that the next round of Us fiscal stimulus will be late and/or insufficient. A combination of these factor could depress risk appetite and increase demand for the safe haven USD which would be reflected in USD crosses across the board.”
“Our three-month NZD/USD forecast is 0.65.”
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