Citi Predicts New Zealand Dollar to Underperform Ahead of US Election
In a recent report, Citi has expressed concerns about the upcoming November US Presidential election’s potential impact on high-beta currencies, particularly the New Zealand Dollar (NZD). The financial environment is expected to see increased risk avoidance as the election draws near, which historically does not favor high-beta currencies like the NZD.
The Reserve Bank of New Zealand’s (RBNZ) decision to initiate monetary easing has further heightened the asymmetrical risk facing the NZD. Citi forecasts that the NZD’s recent rebound against the US Dollar (USD) will halt before reaching USD0.61/NZD, with the potential for the currency pair to drop to its 2023 low of around USD0.58/NZD in the coming months.
Citi’s analysis also casts doubt on the NZD’s performance against the Japanese Yen (JPY), suggesting that the currency pair has hit a long-term ceiling. Any future rebounds are unlikely to push the pair above its 200-day moving average, currently around ¥92/NZD.
The forecast by Citi reflects a cautious outlook on the NZD amidst global political events and central bank policy decisions. Investors are advised to monitor these developments closely and consider potential impacts on their investment portfolios.
By staying informed and proactive, investors can navigate the uncertainties in the financial markets and make well-informed decisions to safeguard their finances for the future.