7 May 2014
Macro trade: Short NZD/USD - JPMorgan
FXStreet (Bali) - Paul Meggyesi, FX Strategist at JPMorgan, recommends to stay short NZD/USD this year from a macro level standpoint, saying that positions look overstretched.
Key Quotes
"The US NFP report is not sufficient by itself to trigger the long-awaited and widely forecast broad uptrend in the dollar."
"It is a start but for now we confine long dollar trades to a handful of currencies where the leverage from positioning and/or the domestic economic story offer the greatest potential for the dollar to move higher."
"NZD is the most compelling candidate on both grounds: amongst the highest speculative positions in the past five years and domestic developments that are starting to challenge the aggressive interest rate trajectory priced by the NZD curve (another 50bp this year followed by 50bp in 2015)."
"The main factors to track in this story are dairy prices (down 20% so far, with the next dairy auction to be held on May 6); the cooling in the housing market (house sales -10% oya) and RBNZ rhetoric (we expect it to pause at the June or July meetings."
Key Quotes
"The US NFP report is not sufficient by itself to trigger the long-awaited and widely forecast broad uptrend in the dollar."
"It is a start but for now we confine long dollar trades to a handful of currencies where the leverage from positioning and/or the domestic economic story offer the greatest potential for the dollar to move higher."
"NZD is the most compelling candidate on both grounds: amongst the highest speculative positions in the past five years and domestic developments that are starting to challenge the aggressive interest rate trajectory priced by the NZD curve (another 50bp this year followed by 50bp in 2015)."
"The main factors to track in this story are dairy prices (down 20% so far, with the next dairy auction to be held on May 6); the cooling in the housing market (house sales -10% oya) and RBNZ rhetoric (we expect it to pause at the June or July meetings."