Logo

Posts

New Zealand dollar price forecast 12 November 2020

2020-11-12

2020-11-12

Five reasons to buy kiwi. Forecast as of 12.11.2020Dmitri Demidenko

The US and euro area are struggling with the second pandemic wave. However, in China, Australia, and New Zealand, the economies are recovering, strengthening the local currencies. Which currency will be the best performer? Let us discuss the NZD outlook and make up an [NZDUSD][1] trading plan.

Monthly fundamental forecast for New Zealand dollar

One of the main beneficiaries of Joe Biden’s victory in the US presidential elections has become the New Zealand dollar. Investors expect the US-China trade relations to improve, which supports the currencies of the countries having close trade links with China. Unlike Australia, New Zealand didn’t accuse China of the COVID-19 laboratory origins and may not worry about a potential trade war with China. Australia has to solve the issues associated with Chinese import tariffs, the delays in cargo acceptance, and anti-dumping investigations. The deterioration of the trade relations between Australia and China presses down the [AUDNZD][2].

China is a recognized leader in the fight against the coronavirus pandemic. However, New Zealand has also performed quite well in pandemic management. Lockdowns have been efficient. Unlike most countries, which continue the struggle with the second pandemic wave and look forward to the COVID-19 vaccines, New Zealand can secure safety for the inhabitants. The RBNZ is quite optimistic about the prospects of the New Zealand economy. Yes, the regulator predicts that New Zealand’s GDP will contract by 0.9% in the 2020⁄2021 fiscal year, which ends in March. Nonetheless, compared to the previous estimate of -1.5%, the current one is clearly better.

Unlike the RBA, the RBNZ won’t cut the interest rates stating that the new financing for the lending program (FLP) would be more effective than cutting the base interest rate from 0.25% to 0.1%. The central bank should lower the interest rates on bank loans, thereby supporting the economy’s recovery. Wellington has already fallen into the whale-in-the- pond trap that is typical of Tokyo. Through aggressive purchases of bonds within the QE framework, the Reserve Bank increased its share in the debt market from 6% to 37% within 7 months. In comparison, the Bank of Japan took three years to increase its share from 11% to 37%.

Central banks’ ownership of government bonds

Source : Bloomberg

The whale in the pond limits the RBNZ tools in terms of monetary expansion. Amid low bond yields and excessive central bank holdings of government bonds, investors will hardly rush to invest money into the local assets. That is why New Zealand could face problems with the funding of the current account deficit.

Monthly [NZDUSD][3] trading plan

So, there are several factors that should encourage kiwi bulls. The US- China trade relations improve, there are no trade disputes between New Zealand and China, the pandemic managed has been efficient, and the RBNZ monetary expansion is limited. Yes, Donald Trump has another ten weeks to shake the markets. But I don’t think Trump will start the trade war with China. So, one could use the drawdowns to add up to the [NZDUSD][3] longs opened in [October][4] with the medium-term targets at 0.705 and 0.72.

P.S. Did you like my article? Share it in social networks: it will be the best “thank you” :)

Ask me questions and comment below. I’ll be glad to answer your questions and give necessary explanations.

Useful links:

  • I recommend trying to trade with a reliable broker [here][5]. The system allows you to trade by yourself or copy successful traders from all across the globe.
  • Use my promo-code BLOG for getting deposit bonus 50% on LiteForex platform. Just enter this code in the appropriate field while [depositing][6] your trading account.
  • Telegram chat for traders: . We are sharing the signals and trading experience
  • Telegram channel with high-quality analytics, Forex reviews, training articles, and other useful things for traders

Price chart of NZDUSD in real time mode

The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.

Rate this article:

{{value}}

( {{count}} {{title}} )

  1. my.liteforex.com/trading/chart?symbol=NZDUSD&returnUrl=true
  2. my.liteforex.com/trading/chart?symbol=AUDNZD&returnUrl=true
  3. my.liteforex.com/ru/trading/chart?symbol=NZDUSD&returnUrl=true
  4. www.liteforex.com/blog/analysts-opinions/commodity-currencies-take-a-hit-forecast-for-audusd-nzdusd-and-usdcad-as-of-19102020/
  5. my.liteforex.com/?category=analysts-opinions&slug=five-reasons-to-buy-kiwi-forecast-as-of-12112020&openPopup=%2Fregistration%2Fpopup&utm_source=blog&utm_medium=article&utm_campaign=bonus
  6. my.liteforex.com/deposit/?category=analysts-opinions&slug=five-reasons-to-buy-kiwi-forecast-as-of-12112020&promo_code=BLOG&utm_source=blog&utm_medium=article&utm_campaign=bonus