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The New Zealand dollar remained the worst of the major currencies for one month on Thursday, but analysts noted this week that it will outperform the market this week. TD Securities, and already in April it began to compensate for previously lost losses to a number of rivals.
The New Zealand dollar may have dropped against the US dollar and other currencies in early April this year after being hit by data last month showing a slower-than-expected economy in the final quarter of 2020 and subsequent intervention by the New Zealand government to curb economic growth Prices.
The kiwi rose against all major currencies on Thursday, with the exception of the Japanese yen and the Swedish krona, which were also underperforming in March and the previous month and are likely to rise further in the near term, at least against the US dollar. weeks according to strategists at TD Securities.
“Our seasonal pattern indicates upside potential for the NZD in the first two weeks,” said Mark McCormick, head of global forex strategy at TD Securities. “It is currently the cheapest high frequency fair value (HFFV) major currency, traded at a nearly 4% discount. It also became one of the biggest shifts in our positioning indicator (PIT) in the last month. “
Over: NZD / USD the rate is displayed at daily intervals with Fibonacci retracements from the March 2020 trend. Click to enlarge.
TD Securities this week recommended that clients buy NZD / USD around 0.7018 and look for a move towards 0.72 as their preferred trade for this period, although they also cited internal seasonal trend research to suggest that the kiwi might actually get. two-week rise in price. first half of April.
The NZD / USD fell more than -7% between February 25 and March 25, with the lion’s share of the losses falling between the release of the latest quarterly GDP report on March 18 and immediately after the government announced its market intervention. housing in March. 23.
But the exchange rate was still down 4.67% from late February levels on Thursday, despite tentatively stabilizing during the first week of April, leaving the NZ dollar undervalued by as much as -4%, according to TD Securities. “fair value”.
“New Zealand dollar/ USD holds above 0.7000. ANZ’s business confidence in New Zealand fell in April, but it continues to signal good growth prospects and rising price pressures, ”says Elias Haddad, strategist at the company. Commonwealth Bank of Australia… “Our colleagues at ASB predict that the RBNZ will begin OCR cancellation from August 2022 and will not increase the Large Scale Asset Purchase Program (LSAP) limit of NZ $ 100 billion. At the moment RBNZ has accumulated 51.16 billion New Zealand dollars ”.
Above: Pound to New Zealand dollar is displayed at daily intervals next to NZD / USD (blue). Click to enlarge.
New Zealand’s near-complete eradication of the coronavirus and double-digit growth in house prices have led investors to become less pessimistic about the Kiwi economy and Reserve Bank of New Zealand (RBNZ) is less convinced that negative interest rates may someday be a necessary remedy.
This led investors to invest in qiwi in the last quarter, while maintaining demand for the currency until early 2021 until February disappointments.
But for reasons that are largely unknown, the kiwi usually performs well in any given April, along with the pound in what is called “seasonality”.
The seasonality and sheer magnitude of the Kiwi dollar losses mainly in March could lead to support for the NZD / USD and other exchange rates in the coming weeks, but outside of this location, much will be determined by the domestic economy, the global economic picture and market appetite. U.S. dollars.
“The dollar index and US Treasury yields are lower this week despite huge US job growth in March. This casts doubt on expectations that the US dollar will gain new gains in the second quarter. But there is still a lot of financial support that needs to be saved. the US economy is buzzing, “says Imre Spiser, New Zealand’s head of strategy at Westpac… “NZD / USD remains in consolidation mode around 0.7000 and below the key resistance at 0.7100. We are watching this level closely – a break above could mean that we will move to a bullish position in the near future. slowdown in the growth of the New Zealand economy. “
Above: Pound to New Zealand dollar is displayed at weekly intervals next to NZD / USD (blue). Click to enlarge.