History calls for caution on Kiwi
REAL-LIFE PROBLEMS, INNOVATIVE SOLUTIONS
Background
Broad economic fundamentals suggest the NZD is stretched, and is trading on borrowed time. Here we offer a solution to European corporates with short NZD exposures who wish to address this risk.
Our big picture view of the NZD sees it heading lower over 2007. However, we are mindful that the Kiwi may gain short term momentum as we head into year-end. Indeed, analysis of NZD reveals a strong tendency to squeeze higher over Christmas against the USD, and on the crosses.
The average move
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