Forex Flash: NZD/USD forecasts raised on China data, RBNZ – UBS
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NZD/USD
FXstreet.com (Córdoba) - The UBS analyst team raised its NZDUSD forecasts to 0.80, 0.82 and 0.84 for 3-, 6- and 12-months respectively as recent improvement in China economic data suggest that its economy has bottomed out, which is supportive of commodity-related currencies.
"Furthermore, although the Reserve Bank of New Zealand kept policy rates unchanged this week, it noted that 'market sentiment has improved from earlier in the year, suggesting the risks to the global outlook are more balanced'", they explain. "The central bank added that the policy rate remains appropriate 'for now', which in our view implies that eventual rate hikes are likely".
"That said, the near-term upside potential for NZD still remains constrained by fairly elevated levels of speculative net-long NZD positioning, as well as the RBNZ's concern over the strong NZD exchange rate", says UBS. "Hence investors who wish to add NZD exposure are advised to wait for pullbacks towards 0.80 - 0.81 technical support levels as a starting point".
"Furthermore, although the Reserve Bank of New Zealand kept policy rates unchanged this week, it noted that 'market sentiment has improved from earlier in the year, suggesting the risks to the global outlook are more balanced'", they explain. "The central bank added that the policy rate remains appropriate 'for now', which in our view implies that eventual rate hikes are likely".
"That said, the near-term upside potential for NZD still remains constrained by fairly elevated levels of speculative net-long NZD positioning, as well as the RBNZ's concern over the strong NZD exchange rate", says UBS. "Hence investors who wish to add NZD exposure are advised to wait for pullbacks towards 0.80 - 0.81 technical support levels as a starting point".
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