Kiwi on the front foot - ANZ

Analysts at ANZ said that the NZD has started the New Year on the front foot, rising around 2% against the USD since 22nd December and is knocking on the door of 72 cents – a three month high. 

Key Quotes:

"While in some ways this strength reflects a typical seasonal move through the liquidity-thin holiday period, it is not inconsistent with the rally in other risk assets over the past couple of weeks, global equities especially. 

The USD has also been struggling, despite reasonable data, the passage of the tax bill and expectations that the Fed will continue to normalise. With global growth momentum looking solid (typically boosting commodities and the NZD), and CFTC figures showing extreme short positioning in kiwi, the bias does appear for further NZD squeezes higher. 

While we do believe the near-term domestic growth picture is set to look a little more mixed, it is not until the global liquidity cycle turns and volatility lifts (affecting risk appetites) that we see the NZD back on the back foot. We expect that to be more of a mid to late 2018 story."