The rally in New Zealand’s currency against the U.S. dollar to its highest level in more than two years may be poised to falter as momentum studies signal recent gains are vulnerable.
The drop in currency volatility to the lowest levels since 2007 is proving a boon to traders able to exploit differences in global interest rates.
The yen gained versus 10 of its 16 major peers as appetite for riskier assets cooled after China reported the biggest trade deficit in two years and the slowest rise in consumer prices in 13 months.
Investors should bet the pound will strengthen against the dollar before the release of Bank of England minutes, U.K. employment data and the budget this week, according to Morgan Stanley.
Currency traders are having their worst start to a year since 2010 as a dearth of trends in major foreign-exchange markets crushes their investment strategies.
The Swiss franc is offering carry traders some of the best returns in developed markets as forecasts it will depreciate faster than the yen boost its appeal as a funding currency.
Investors should sell the New Zealand dollar against the yen and bet the currency will decline to 59.80, according toStandard Bank Plc.
Standard Bank Plc advised investors to sell the New Zealand dollar against the U.S. dollar, estimating the so-called kiwi will weaken to 68.20 U.S. cents.
Strategists are raising their forecasts for the pound more than for any other currency versus the euro on speculation an improving U.K. economy is making the central bank more tolerant of a stronger exchange rate.
Investors should buy the dollar against the yen, speculating the U.S. currency will appreciate to 83.40 yen, Standard Bank Plc said.
"People have been sucked into carry trades."
- Steve Barrow on Apr 09, 2014
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