🤯 Have you seen our AI stock pickers’ 2024 results? 84.62%! Grab November’s list now.Pick Stocks with AI

NZD: Too Far Down Under?

Published 11/01/2017, 08:15 AM
Updated 03/21/2024, 07:50 AM
NZD/USD
-
AUD/NZD
-
DX
-
NZ2YT=RR
-
NZ5YT=RR
-
NZ10YT=RR
-

As US firm BNY Mellon wrote on Tuesday since the election a month ago the fall in the value of the New Zealand dollar versus the US dollar (NZD/USD) has been "at the upper end of monthly declines seen since the financial crisis, albeit one that has taken place in an orderly fashion." The US firm notes that this fall has occurred against the backdrop of a narrowing of the gap between the more highly yielding New Zealand 2-Year, 5-Year and 10-Year paper and equivalent US Treasuries.

Yet as Canada's TD Securities wrote, also on Tuesday, the political programme already announced for the new ruling coalition's first 100 days in office "if implemented as planned, is rather inflationary, from both a supply and demand perspective." TD takes the view that "with a stronger Q3 NZ CPI outcome and a much weaker exchange rate than expected, a simple update of the RBNZ’s inflation model sees significant upside, even without referring to the new [government's] policy agenda." The Canadian firm also notes that AUD/NZD has reached an 18 month high, adding that if the new NZ government fiscal plans do prove inflationary then New Zealand's central bank "has ample fuel to turn hawkish." Such logic might lead some to wonder if the NZD is getting a little oversold, given how far it has fallen out of favour on the currency markets in recent weeks. Whether or not traders as a whole agree is an open question.

All financial products traded on margin carry a high degree of risk to your capital. Any forecasts given are not a reliable indicator of future performance and the decision to act on any ideas and suggestions presented is at the sole discretion of the reader

Latest comments

Loading next article…
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.