Morgan Stanley commented on the New Zealand dollar that the RSI shows that it is in oversold zone. And it would prefer to sell the EURNZD.
Reasons for selling EUR:
- Weak economic data.
- Slow down political reform.
- Italy's political risk may rise.
- The risk is improvement of the European data, which leads to a reversal of the weakness of the euro and therefore its rise.
Reasons for buying NZD (expects medium-term weakness)
- Widening interest rate differential.
- Rising offshore funding costs.
But the outlook for the New Zealand economy is strong and is expected to grow more than 3% in the second half of 2018 and 2019. The RBNZ is waiting for inflation to rise ahead of a rate increase in the first quarter of 2019.
