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NZD resilience rooted in immigration, low global yields and strong EM markets, political risk looms
We are a bit surprised to see the NZD/USD test new highs in light of some correction in emerging market currencies and equities in recent weeks. However, in a broad context, the steady narrowing in global risk premiums in the last two years and renewed fall in US government bond yields this year appears to be supporting the NZD, even if its yield advantage is at a low since 2001. The NZD has also been supported by stronger commodity prices since mid-2016. The CBA NZ commodity price index for New Zealand is at a high since 2014. The RBNZ noted that immigration and terms of trade support the NZD growth outlook. Indeed ... (full story)
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