Thoughts on The NZD Mid August

The NZD is heading for lows in February. You can see there is a tremendous amount of pressure to short on bot NZD/USD and NZD/JPY. Arguably, the lower it goes the more pressure it puts on any carry traders to unwind their positons. On top of that, any hedge funds that had major positions in NZD/JPY or NZD/USD and are staring down major recessions and are going to have to unwind their positions as well.

I don’t see the Reserve Bank of New Zealand interfering at all. In fact there are many in New Zealand that welcome this decline because it lower the prices of their exports in comparison to other currencies and it will curb inflation.  It will be interesting to see what transpires in the next few days, but I don’t predict this upward trend will continue for long.