A (22 May) note from MS on the kiwi dollar (this via Bloomberg)
NZD appears oversold (citing RSI)
- Risk reversals and positioning indicators suggest the risk/reward favors tactical NZD buying
Favour EURNZD shorts.
On EUR:
- weakening economic data
- slowing political reform
- prospect of rising political risks from Italy
- risk is improvement in European data leading to reversal in EUR weakness
On NZD - expects medium-term NZD weakness
- widening interest-rate differentials
- rising offshore funding costs
- weaker risk backdrop
But … New Zealand outlook strong, growth expected to run >3% over 2H18 and 2019
RBNZ waiting for a pickup in inflation before hiking rates … in 1Q19
