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14 Jan 2015
Risk-reward favors being short NZD – BAML
FXStreet (Barcelona) - Analysts at Bank of America-Merrill Lynch, believe current NZD levels offer good risk-reward to position for some depreciation, and anticipate NZD/JPY to head lower towards 87.00 levels.
Key Quotes
“Investors may well be skeptical of the RBNZ’s ability to counter the impact of loose monetary policy elsewhere but it is nonetheless likely that the RBNZ will try. And with NZD having outperformed most currencies over the past few months, we believe current levels offer good risk-reward to position for some depreciation.”
“On our part, we have recommended being short NZD/JPY as part of our top relative value trades from the Year Ahead – while this has been mostly range bound since then, the small decline has so far compensated for the cost of carry and we believe a break below 90 is likely if the RBNZ sounds more dovish, alongside the broader pressure on commodity currencies. We stick with our 87 target for this trade.”
Key Quotes
“Investors may well be skeptical of the RBNZ’s ability to counter the impact of loose monetary policy elsewhere but it is nonetheless likely that the RBNZ will try. And with NZD having outperformed most currencies over the past few months, we believe current levels offer good risk-reward to position for some depreciation.”
“On our part, we have recommended being short NZD/JPY as part of our top relative value trades from the Year Ahead – while this has been mostly range bound since then, the small decline has so far compensated for the cost of carry and we believe a break below 90 is likely if the RBNZ sounds more dovish, alongside the broader pressure on commodity currencies. We stick with our 87 target for this trade.”