NZD/USD was hit by several factors, mostly a strong US jobs report contradicting a poor one in New Zealand.
What’s next for the kiwi? BNP Paribas weighs in:
Here is their view, courtesy of eFXnews:
In New Zealand, the main takeaway from RBNZ’s latest financial stability report is the increased concerns over loans to dairy farms and elevated house price-to-income ratios, notes BNP Paribas.
“Concerns about housing could be seen as standing in the way of further rate cuts and NZD has strengthened accordingly. We suspect however that the RBNZ would lean further on macro prudential measures to address housing issues while easing its rates stance as well (markets are pricing a full rate cut by March),” BNPP argues.
“We are biased to fade rallies in NZDUSD with our STEER model signalling the pair is overbought, with short-term fair value at 0.6280,” BNPP advises.
Moreover, BNPP notes that market participants appear wary of building USD longs too quickly, but USD pullbacks are likely to see good demand amid building anticipation of tightening in December, argues BNP Paribas.
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