ING FX Strategy Research notes that NZD has outperformed in the recent near-perfect carry-friendly conditions (ie, low interest rate volatility and resilient risk appetite).
“The RBNZ has been saying no thanks to a strong NZD for a while and is likely to express concern at the latest carry-fuelled rally. The central bank is likely to respond by shelving rate hike plans to 2H18; the flatter OIS curve should keep NZD upside limited, with ramped up RBNZ jawboning also tempering speculative investors in the short-term,” ING argues.
In line with this view, ING targets NZD/USD at 0.71 in 1-month and at 0.68 in 3-month.
Source: ING Global Markets Research
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