11 Jun 2015
NZD/USD to decline further, crosses might be a profitable trade - ANZ
FXStreet (Barcelona) - Sam Tuck of ANZ, notes that the NZ data ahead poses downside risks for NZD, and hence suggests using the kiwi crosses for a potential profitable trade, and further targets NZD/USD to move towards 0.6827.
Key Quotes
“We expect a further cut in July and a 50% chance of a further cut in 2015, keeping the NZD under pressure. We point to recent trends in ANZ proprietary indicators as a warning sign of what may be in store over Q2. For instance, readings from the Heavy Traffic Index have receded for five months in a row.”
“Before the July OCR meeting (23 July), we also have the Q2 CPI (17 July). The ANZ inflation gauge has posted falls in April (-0.2%) and May (-0.1%), suggesting that non-tradable and core inflation will be subdued. Despite an expected 7% bounce in petrol prices, we expect a soft 0.3% q/q increase in Q2 CPI (+0.1% y/y).”
“If the data develops as we expect, there is a risk of NZD falls in excess of what we already anticipate. At present, we expect the NZD to decline further and are targeting 0.6827 in NZD/USD. We also expect AUD/NZD and GBP/NZD to show further appreciation and NZD/JPY to decline further, and believe short NZD positions vs those currencies will be profitable.”
Key Quotes
“We expect a further cut in July and a 50% chance of a further cut in 2015, keeping the NZD under pressure. We point to recent trends in ANZ proprietary indicators as a warning sign of what may be in store over Q2. For instance, readings from the Heavy Traffic Index have receded for five months in a row.”
“Before the July OCR meeting (23 July), we also have the Q2 CPI (17 July). The ANZ inflation gauge has posted falls in April (-0.2%) and May (-0.1%), suggesting that non-tradable and core inflation will be subdued. Despite an expected 7% bounce in petrol prices, we expect a soft 0.3% q/q increase in Q2 CPI (+0.1% y/y).”
“If the data develops as we expect, there is a risk of NZD falls in excess of what we already anticipate. At present, we expect the NZD to decline further and are targeting 0.6827 in NZD/USD. We also expect AUD/NZD and GBP/NZD to show further appreciation and NZD/JPY to decline further, and believe short NZD positions vs those currencies will be profitable.”