New Zealand Dollar offers best risk-reward for long positions ahead of RBNZ – Societe Generale

Markets regard an RBNZ rate rise as almost certain and anticipate two further increases by mid-2026. Against that backdrop, Societe Generale’s Kit Juckes identifies the New Zealand Dollar as the most attractive G10 currency ahead of this week’s central bank meetings. Improving growth prospects and NZD’s underperformance against AUD this year underpin his view that a long NZD position offers the best risk-reward balance, notwithstanding its recent gains.

NZD stands out as preferred G10 trade

"The markets are priced for a very remote chance of an ECB rate hike, a small chance of a hike by the Fed, a strong chance of a Bank of Canada hike, and almost certainly an RBNZ hike."

"The two non-hikers are expected to raise rates in December, and this week’s expected hikers are likely to act two more times by mid-2027, so the messaging needs to be strong in both cases."

"As for NZD, it does have the advantage that growth expectations are picking up, and the currency has lost a lot of ground to the AUD this year."

"It looks like the best risk-reward long going into tomorrow’s meeting, despite recent gains."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)