Societe Generale’s Kit Juckes has identified the New Zealand Dollar (NZD) as the most appealing G10 currency ahead of this week’s central bank meetings. Markets are nearly certain of a rate hike by the Reserve Bank of New Zealand (RBNZ), with expectations for two additional hikes by mid-2027. Despite recent gains, Juckes believes NZD offers the best risk-reward opportunity for a long position.
Juckes notes that growth prospects for New Zealand are improving, and the NZD has underperformed against the Australian Dollar (AUD) this year. This underperformance, combined with the strong likelihood of an RBNZ hike, makes NZD an attractive play. The markets are also pricing in a remote chance of an ECB hike, a small chance of a Fed hike, and a strong chance of a Bank of Canada hike.
Juckes emphasizes the importance of strong messaging from the central banks expected to hike rates this week. The two non-hiking central banks are anticipated to raise rates in December, while the hiking banks are likely to act two more times by mid-2027. Despite recent gains, NZD remains a standout choice for investors looking to capitalize on central bank movements.