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Traders have bet that the kiwi dollar would fall against the $ 1.2 billion greenback, adding to the risk of a rebound correction even though US interest rates are unusually higher than 39 in New Zealand.
The latest Commodity Futures data The Commercial Commission (CFTC) shows that the net positions of speculative traders are NZD short and long US dollars to the tune of 1.2 billion US dollars, at levels reached only a few times since 2010. Being short means betting on a currency to decrease. A trader can borrow the currency with the idea that they can buy it cheaper, leaving some profit when the money is paid back.
"The indicator may be a useful contrarian indicator," said Jason Wong, senior markets strategist at the Bank. from New Zealand. "When the positioning of the speculators is sharp, it means a low rate of hurdle to see a rise in the NZD, because the positive news would tend to cause a closure of this positioning, which would lead speculators to buy NZD."
Kiwis were "quite rare because in the past, short selling of a high yielding currency like NZD could be expensive," Wong said. "With NZ short rates now lower than US rates, it is now much cheaper to bypass the NZD In this sense, we should not be too surprised that bypassing the NZD has become more of a theme in recent years. " 19659002] The New Zealand dollar fell to its lowest level in two years on Friday at 67.34 US cents. So far this year, it has fallen 4.7% against the US dollar. In contrast, the US dollar index, which measures the greenback versus a basket of currencies, gained 3%. Merchants who look at the cards say that there is other reason to suspect that the kiwi could bounce back.
Last week, the Reserve Bank kept its key rate at 1.75% and reiterated that it was in no hurry to raise rates, which pushed some bank economists to push back their expectations for a full rate hike until March 2020. The last decision of the Federal Reserve was to raise the federal funds target from 1.75% to 2% and the market is betting that # There will be others.
Mark Johnson, a private client at OMF "double-top". Twice in the last three weeks, the index climbed to around 95.50, a record high of 11 months, failing to break higher, indicating a level of resistance that could hold. Meanwhile, the decline of the New Zealand dollar against the greenback last week pushed the kiwi's relative strength index below 30, indicating that it could rise.
"If you try to assess the potential for short-term weakness in the kiwi, what would the drivers be," Johnson said. "We have heard from the Reserve Bank: there is not much data to get things done, because there could be a corrective rebound when some of these short positions are squeezed", a- he said.
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