Fundamental Forecast for the Kiwi: Bearish
- NZD/USD broke through the November lows as risk aversion around the world continued heating up throughout the week.
- Positioning remains stretched in the Kiwi-Dollar, indicating further losses may be down the road.
- If you’d like to follow positioning and sentiment changes on the Kiwi to get hints towards future movement in that market, check out our real-time SSI page (click here).
The New Zealand Dollar continues to display a tight relationship with the bigger overall macro-theme of China and the larger overall threat of an Asian slowdown. Since China began their most recent descent on the heels of the December rate hike out of the Federal Reserve, the Kiwi hasn’t held up well at all. Eleven of the past twelve days have seen the Kiwi trade lower against the greenback (for a total move of -6.3%), and if we match it up with the Yen, it’s even worse – with the same 11 of 12 tally but an even larger move lower; with a full -8.45% lost against the Yen over that 12-day sequence.