New Zealand Dollar Offers Opportunity: UBS
- Written by: Gary Howes
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Strategists at the UBS Chief Investment Office "see an opportunity to go long in the NZDUSD" over a short-term horizon.
In a weekly strategy brief, released Jan. 22, the office says it is targeting a move to 0.61.
The call seeks to capture ongoing NZ dollar momentum that takes the currency to the joint top of the G10 performance board for 2026.
The other outperformer of 2026 is the Kiwi's antiopdean cousing the Australian dollar.
"New Zealand’s robust macroeconomic indicators, favourable terms of trade, and the possibility of higher-than-anticipated fourth-quarter CPI suggest that the Reserve Bank of New Zealand (RBNZ) may adopt a more hawkish stance at its meeting on 18 February," says UBS.
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New Zealand's Q4 inflation printed on the hotter side of expectations Friday, with the quarterly figure hitting 0.6%, which is what UBS economists forecast, whereas the consensus was lower at 0.5%.
The annual rate rose to 3.1% y/y in Q4, beating estimates for 3.1%.
New Zealand dollar's positive momentum also rests with a cull of short positions in the currency on global FX markets.
"Positioning has been the likely largest influence on the currencies," says David Forrester, Senior FX Strategist at Crédit Agricole, when discussing AUD and NZD outperformance in a recent note.
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Crédit Agricole's positioning indicator shows the NZD came into the week as the largest short in the G10. "Indeed, the NZD has been one of the standout performers," says Forrester.
Analysis from RBC Capital Markets says the move can run a great deal further.
"At the extremes, positioning matters," says Richard Cochinos, FX Strategist at RBC Capital. "This is most obvious in NZD currently."
RBC's studies show positioning in NZD futures is "very short" and it's the shortest across all assets.
"In 2019 when these shorts unwound NZD appreciated 8%," he points out. "In the 2025 short unwind the NZD appreciated 9.4%."
