CIBC FX Strategy Research discusses NZD outlook, noticing that the post NZ election period has seen investors aggressively re-position their NZD bets.
"From a record long skew at the end of July, positions have unwound to such an extent that new shorts are nearing mid-2015 extremes. So it’s not surprising that over the same period the currency has been by far the worst performing major against the USD.
The question now is whether the market has become too bearish on the decision by NZ First leader Winston Peters to throw his support behind untried Labour PM Jacinda Ardern. While inward migration is set to decelerate from recent extremes, the central bank has lifted its inflation forecasts, suggesting that policymakers have become marginally more hawkish and implying NZD is trading too weak," CIBC argues.
CIBC targets NZD/USD around 0.70-0.72 through 2018.
Source: CIBC Economics – CIBC Capital MarketsOriginal Article
