NZD Update: What's Happening in FX Markets

The ANZ NZD Update highlights the Kiwi's struggles against the USD and AUD, noting that NZD/AUD has hit a 13-year low. Factors including falling FX volatility, the return of carry trades, and energy import dependency are weighing on the currency's outlook.

Key Takeaways

• 1.NZD/AUD hit a 13-year low in mid-May, driven by interest rate differentials and relative economic indicators like unemployment.
• 2.Falling FX volatility is re-centering investor focus on carry trades, which is detrimental to the NZD given its low short-end interest rates relative to the USD and AUD.
• 3.New Zealand's status as a net energy importer is weighing on the currency as markets penalize energy-dependent nations amid global oil shocks.

Table of Contents

• Recent developments and updated thoughts
• NZD/AUD deep dive in charts
• Historical charts
• Macroeconomic and financial scorecard
• Volatility monitor
• Fair value
• Market positioning
• Correlation analysis
• ANZ Forecasts
• Key global events calendar
• Contacts/Meet the team
• Important Notice

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