New Zealand Dollar Rates Recover From China-induced Lows as Trump Talks Trade Deals

The New Zealand Dollar recovered from a December low Friday as risk-assets stabilised ahead of the weekend and President Donald Trump suggested a deal to end the so-called trade war between the U.S. and China could be near.

The New Zealand Dollar received a boost Thursday after the government opened its books to the market, revealing a financial position that is in rude health, and analysts are still predicting further gains for the Kiwi currency ahead. 

The Pound will rise against the New Zealand Dollar in the year ahead as the Kiwi currency is hamstrung by a faltering economy, which will prevent it from capitalising on a weaker U.S. Dollar in 2019 according to the latest forecasts from Societe Generale.

The Pound-to-New-Zealand-Dollar rate remains in a downtrend and will continue lower this week despite fundamental forces that could offer the exchange rate a temporary rebound.

Growing scepticism about the sustainability of the China-US trade war ceasefire is likely to increase risk aversion and support the Dollar to the detriment of the likes of the Yuan, Australian and New Zealand Dollars.

The Pound-to-New-Zealand Dollar rate declined sharply in November and has entered the new month in bearish form, leaving the exchange rate vulnerable to further declines. 

In the short-term we see a bias for more GBP/NZD downside, conditional on the exchange rate breaking below the 1.8630 November 16 lows.

The New Zealand Dollar is the G10 currency universe's best performer for November but the Antipodean unit is now overvalued, according to analysts at Bank of New Zealand (BNZ), who say to tread carefully over coming weeks because the currency could easily hand back all of its recent gains.