eFXdata reports that Barclays Research discusses NZD outlook and adopts a bearish bias over the medium term targeting NZD/USD around 0.62 by year-end.
"We expect recent NZD strength to reverse, and forecast further weakness into 2021. NZD gains versus the AUD and risk sentiment appear exaggerated and we think risk premia is too low given the still uncertain macro outlook and risks of more RBNZ measures. The RBNZ has already hinted that it could include foreign bonds under its LSAP program and has mentioned that negative rates are also under consideration, albeit in 2021. These policy choices could potentially weaken the NZD sharply and cannot be ignored, especially as the RBNZ forecasts also incorporate a sizable drop in the NZD TWI," Barclays notes.
"We think foreign investors could continue to unwind their NZGB holdings as RBNZ purchases crowd out other holders. The NZD will likely cheapen to help finance an already negative basic balance and portfolio outflows. While the domestic economy could recover faster with the elimination of COVID-19 cases, the external demand shock is likely to weigh heavily given the high dependency on exports, and tourism will likely remain a drag as borders remain closed to international visitors. We expect NZDUSD to weaken through our forecast horizon and expect NZD to underperform the AUD," Barclays adds.
Risk Warning: Trading Forex and CFDs on margin carries a high level of risk and may not be suitable for all investors. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Prior to trading, you should take into consideration your level of experience and financial situation. TeleTrade strives to provide you with all the necessary information and protective measures, but, if the risks seem still unclear to you, please seek independent advice.
© 2011-2020 TeleTrade-DJ International Consulting Ltd
TeleTrade-DJ International Consulting Ltd is registered as a Cyprus Investment Firm (CIF) under registration number HE272810 and is licensed by the Cyprus Securities and Exchange Commission (CySEC) under license number 158/11.
The company operates in accordance with Markets in Financial Instruments Directive (MiFID).
The content on this website is for information purposes only. All the services and information provided have been obtained from sources deemed to be reliable. TeleTrade-DJ International Consulting Ltd ("TeleTrade") and/or any third-party information providers provide the services and information without warranty of any kind. By using this information and services you agree that under no circumstances shall TeleTrade have any liability to any person or entity for any loss or damage in whole or part caused by reliance on such information and services.
TeleTrade cooperates exclusively with regulated financial institutions for the safekeeping of clients' funds. Please see the entire list of banks and payment service providers entrusted with the handling of clients' funds.
TeleTrade-DJ International Consulting Ltd currently provides its services on a cross-border basis, within EEA states (except Belgium) under the MiFID passporting regime, and in selected 3rd countries. TeleTrade does not provide its services to residents or nationals of the USA.