BofA Sees NZD Gaining Ground as USD Takes a Hit

Bank of America has adjusted its currency outlook in favor of short positions on the U.S. dollar, citing the distribution of risks despite high uncertainty.

The firm's USD outlook hinges on both U.S. Treasury and Federal Reserve policy credibility, with Bank of America not expecting the Treasury to abandon its efforts to contain borrowing costs through foreign exchange intervention and long-end buybacks.

Accommodative financial conditions suggest that shorting the USD against high-beta foreign currencies is likely to perform well in the near term, particularly if the Fed absorbs higher bill issuance.

Bank of America recommends buying the New Zealand dollar with an entry at 59.57, a target of 0.62, and a stop at 0.58.