17 Jan 2014
Flash: Tactical NZD/USD shorts above 0.84 - BNZ
FXstreet.com (Bali) - NZD/USD should be well supported through the first half of the year, however, short term, selling the pair on approaches towards 0.84 looks like a sensible strategy, notes Kymberly Martin, Strategist ar BNZ.
Key Quotes
"Broadly, we see the current 0.8100-0.8400 trading range sustaining over this period. It is not until later in the year that we anticipate the NZD/USD to decline, contingent on (i) an expected peaking in the NZ terms of trade (ii) US positive growth momentum sustaining, to begin to narrow the differential with NZ. Our end-year NZD/USD target remains at 0.7700."
"In the near-term we believe pushes in the NZD/USD above 0.8400 should be seen as opportunities for establishing tactical short NZD/USD trading positions. The NZ ‘good news’ story is now well understood and priced by the market. Significant upside surprises will likely be increasingly difficult to muster near-term."
"In fact, in coming weeks the risks are likely tilted toward (i) the RBNZ not delivering on a January rate hike that is still priced as a 30% chance by the market (We forecast a first hike in March). (ii) the Fed delivering further ‘tapering’ at its January meeting, and the US delivering a January payrolls number that shows up the soft December report as a bit of an aberration. Combined, these factors could see near-term sentiment move away from the NZD/USD."
Key Quotes
"Broadly, we see the current 0.8100-0.8400 trading range sustaining over this period. It is not until later in the year that we anticipate the NZD/USD to decline, contingent on (i) an expected peaking in the NZ terms of trade (ii) US positive growth momentum sustaining, to begin to narrow the differential with NZ. Our end-year NZD/USD target remains at 0.7700."
"In the near-term we believe pushes in the NZD/USD above 0.8400 should be seen as opportunities for establishing tactical short NZD/USD trading positions. The NZ ‘good news’ story is now well understood and priced by the market. Significant upside surprises will likely be increasingly difficult to muster near-term."
"In fact, in coming weeks the risks are likely tilted toward (i) the RBNZ not delivering on a January rate hike that is still priced as a 30% chance by the market (We forecast a first hike in March). (ii) the Fed delivering further ‘tapering’ at its January meeting, and the US delivering a January payrolls number that shows up the soft December report as a bit of an aberration. Combined, these factors could see near-term sentiment move away from the NZD/USD."