Citi expressed concerns about the potential impact of the upcoming US presidential election in November on high-beta currencies, predicting that the New Zealand dollar (NZD) will underperform.
According to Citi, the financial environment is likely to see greater risk avoidance as the election approaches, which traditionally does not bode well for high-beta currencies such as the NZD.
The Reserve Bank of New Zealand’s (RBNZ) recent decision to initiate monetary easing has increased the asymmetric risk facing the NZD. Citi expects the NZD’s recent recovery against the US dollar (USD) to end before it reaches USD0.61/NZD.
The company expects the currency pair to potentially fall to 2023 lows around USD0.58/NZD in the coming months.
Additionally, the NZD’s performance against the Japanese Yen (JPY) is also under scrutiny. Citi’s analysis shows that the rate has reached a long-term ceiling, indicating that future rebounds are unlikely to push the currency pair above the 200-day moving average, which currently stands at around ¥92/NZD.
Citi’s forecast reflects a cautious stance on the NZD in the context of global political events and central bank policy decisions.
This article was produced with the support of AI and reviewed by an editor. For more information see our General Terms and Conditions.
