The big event for the kiwi is the rate decision by the Reserve Bank of New Zealand. This is set to determine the next move of the currency.
And where will it go? The team at Credit Agricole is bearish:
Here is their view, courtesy of eFXnews:
Unstable risk sentiment and little scope for the RBNZ to turn more hawkish as part of next week’s monetary policy announcement should keep the NZD subject to downside risk.
According to the latest data, price developments have been more muted while the NZD remains in overvalued territory.
Considering weaker external demand expectations as related to more muted global growth conditions, it cannot be ruled out that the RBNZ becomes more dovish next week, which may result in delayed rate expectations.
Elsewhere, speculative positioning has been balanced of late. Thus, there appears little NZD short-squeeze risk, regardless of the currency trading close to multi-month lows.
As a result, we favour selling the NZD, in particular against safe-haven currencies such as the CHF and JPY.
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