Bank of America has recommended that clients buy the New Zealand dollar against the U.S. dollar, setting an entry level at 0.5957 with a target of 0.62 and a stop-loss at 0.58.
The recommendation reflects a broader shift in risk distribution, with the bank reducing its short positions on the U.S. dollar despite ongoing uncertainty. Bank of America’s outlook for the greenback hinges on the credibility of Federal Reserve policy and U.S. Treasury efforts to manage borrowing costs, including potential foreign exchange interventions and long-term bond buybacks.
The bank expects accommodative financial conditions to favor short dollar positions against high-beta currencies in the near term, particularly if the Fed absorbs a larger share of Treasury bill issuances. Bank of America’s bullish stance on the New Zealand dollar is further supported by a hawkish Reserve Bank of New Zealand (RBNZ), which is projected to implement two interest rate hikes in the fourth quarter.
Climate-related risks to global food supply chains are cited as an additional factor underpinning the favorable outlook for the New Zealand dollar, according to the bank’s analysis.
