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NZD: HSBC Recommend Long NZD/USD

NZD
USNew ZealandNorth AmericaBulletAPACForeign Exchange BulletsMarkets

HSBC recommend going long NZD/USD on tactical basis, targeting a move to 0.5910, with a stop set at 0.5630.

  • They note that “recent rhetoric from the Trump administration on trade policy has been less aggressive than expected, particularly on China. This should leave room for markets to reduce policy related premium in the USD in the near term.”
  • They believe that “the NZD is an ideal candidate to play this theme.”
  • They suggest that “despite New Zealand's limited direct trade exposure with the U.S., the NZD has one of the highest sensitivities to Asian EM FX and global ex-U.S. equities among G10 currencies. Both should be key beneficiaries from a softer tone by the Trump administration in the near term.”
  • They also believe that “from the relative rates perspective, there is limited room for near-term dovish RBNZ repricing”
  • Elsewhere, they note that “based on CFTC data, markets built up the largest short NZD futures position in history ahead of Trump's inauguration. NZD/USD screened quite cheap versus fundamental drivers.”
  • However, medium-term they “maintain a bearish NZD bias as trade policy is only one aspect of the strong USD story.”
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HSBC recommend going long NZD/USD on tactical basis, targeting a move to 0.5910, with a stop set at 0.5630.

  • They note that “recent rhetoric from the Trump administration on trade policy has been less aggressive than expected, particularly on China. This should leave room for markets to reduce policy related premium in the USD in the near term.”
  • They believe that “the NZD is an ideal candidate to play this theme.”
  • They suggest that “despite New Zealand's limited direct trade exposure with the U.S., the NZD has one of the highest sensitivities to Asian EM FX and global ex-U.S. equities among G10 currencies. Both should be key beneficiaries from a softer tone by the Trump administration in the near term.”
  • They also believe that “from the relative rates perspective, there is limited room for near-term dovish RBNZ repricing”
  • Elsewhere, they note that “based on CFTC data, markets built up the largest short NZD futures position in history ahead of Trump's inauguration. NZD/USD screened quite cheap versus fundamental drivers.”
  • However, medium-term they “maintain a bearish NZD bias as trade policy is only one aspect of the strong USD story.”