The New Zealand Dollar is the G10 universe's best performing currency for the month of February but the Antipodean unit's strength won't last, according to analysts at RBC Capital Markets, who have told their clients they should prepare for a sudden reversal over the coming months.
The Kiwi Dollar surged against rivals Wednesday after the Reserve Bank of New Zealand (RBNZ) hinted it is not yet ready to entertain the idea of an interest rate cut, taking markets by surprise barely a week after the Reserve Bank of Australia (RBA) changed its own policy guidance.
The Kiwi Dollar will underperform rivals this week as the Reserve Bank of New Zealand attempts to out-dove its Australian sister with new economic forecasts and fresh guidance on the interest rate outlook this Wednesday.
The strong surge after the pair found support suggests the possibility an uptrend is developing, although, a break above the 1.9426 highs would be required for confirmation and to suggest a continuation to the next upside target at 1.9600.
The New Zealand Dollar retreated from 2019 highs Thursday after official data showed cracks opening up in the Kiwi labour market during the final quarter, encouraging speculation the Reserve Bank of New Zealand (RBNZ) could soon be forced to cut interest rates.
The New Zealand Dollar held its own against a recovering U.S. Dollar Friday as the Kiwi currency was supported by an upgrade to the government's credit rating outlook, which may have eased investor fears about the economy.