JPM on the kiwi:
- NZD stands out as an attractive selling candidate
- tends to be an underperformer historically around recessions
- a reasonable choice of hedge to the extent that macro conditions remain challenged
JPM are reasoning that if the USD rises in the event of a sharp slowing in the global economy or the banking crisis worsens the USD should be a 'haven' while the NZD is especially at risk due to New Zealand reliance on commodity exports for offshore income.
Commonwealth Bank of Australia along similar lines:
- too early to conclude the worst of the banking troubles are over
- NZD risk is tilted to the downside in the near-term
- possibly to under 0.55 “if the issues in the banking sector worsen significantly”
Morgan Stanley
- says that historically US dollar strength tends to last for a while even after the first Fed rate cut in a cycle and “it makes sense for investors to have at least some USD-long exposure”
- Morgan Stanley target of 58 for the kiwi
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Collection of dour kiwi views via Bloomberg report.
