Citi Predicts New Zealand Dollar Underperformance Amid US Election Uncertainty
Citi, a leading financial institution, has raised concerns about the potential impact of the upcoming November US Presidential election on high-beta currencies, particularly the New Zealand Dollar (NZD). With the election drawing near, Citi predicts a surge in risk aversion in the financial markets, a trend that historically spells trouble for currencies like the NZD.
The recent decision by the Reserve Bank of New Zealand (RBNZ) to initiate monetary easing has only added to the challenges facing the NZD. Citi forecasts that the recent rally of the NZD against the US Dollar (USD) will soon come to a halt before hitting the USD0.61/NZD mark. In fact, Citi anticipates that the currency pair could drop to as low as USD0.58/NZD, matching its 2023 low, in the months ahead.
Furthermore, Citi's analysis also casts doubt on the NZD's performance against the Japanese Yen (JPY). The firm suggests that the NZD/JPY pair may have hit a long-term resistance level, indicating that any future upticks are unlikely to breach the 200-day moving average, currently positioned around ¥92/NZD.
Overall, Citi's forecast reflects a cautious outlook on the NZD amidst global political uncertainties and central bank policy decisions. Investors and traders are advised to closely monitor developments in the lead-up to the US election and stay informed on potential market impacts.
In conclusion, the analysis provided by Citi serves as a warning for investors and traders to exercise caution when dealing with high-beta currencies like the NZD in the current volatile market environment. By staying informed and being prepared for potential fluctuations, individuals can better safeguard their financial interests and make informed decisions in the face of uncertainty.