EUR/NZD: European hawks to hurt Kiwi - Nomura

The ECB and some other G10 central banks have begun to take steps towards policy normalisation which are likely to be a headwind for higher-beta commodity currencies like NZD.

Key Quotes

“The tone from this week’s central bank chief’s gathering suggests further steps are likely to come. European currencies are likely to continue outperforming over the summer, as economic momentum remains positive and the looming shift in policy stance approaches. Conversely, heightened focus on financial stability, a shift in global central bank policy and rising longer-end yields should be a headwind for higher-beta commodity currencies like NZD. We recommend long EUR/NZD, targeting a move up to 1.6190.”