A trail of despair followed the Kiwi Dollar last week, with grim economic data revealing retail sales tumbling for a third consecutive quarter and investors continuing to curb their appetite for risk.

The tightening of demands for carry trades reflects a bearish outlook for the NZD and as fears of a global recession intensify the Kiwi is likely to experience increased selling pressures. Deteriorating fundamentals continues to spur bets that the Reserve Bank of New Zealand will aggressively cut borrowing costs well into the next year in order to avoid a deep and severe recession.

Volatility is likely to remain high and a lack of data emerging from New Zealand may potentially have a negative effect on the Kiwi. The usual push and pull factors will remain added to by carry trade movements, therefore creating some opportunities for both buyers and sellers. Speak to your FCG account manager to assist with taking advantage of any high points in the market.