New Zealand Dollar

The New Zealand Dollar sits in the middle of the pack at #4, scoring -4 — neither clearly strong nor weak. Interest rates are a moderate support. At around 2.7%, the New Zealand Dollar sits comfortably above several peers on the yield front, though not at the top of the table. Positioning is a clear headwind — speculative futures traders are heavily net-short the New Zealand Dollar, among the most bearish readings in years. That adds selling pressure, though such crowded shorts can snap back quickly. Broader risk appetite is positive, which helps the New Zealand Dollar. As a currency tied to global growth and trade activity, it tends to strengthen when investors feel confident and weaken when they retreat to safety. Weak farm goods like dairy prices are an additional drag. As a commodity-linked currency, the New Zealand Dollar is sensitive to its export basket, and falling prices there erode the terms of trade.