GBP/USD: NZD will be the currency that drops the most against the USD on forex in 2017 (Societe Generale bank)

Societe Generale believes that the NZD will fall the most against the USD on the forex in 2017, while New Zealand remains strongly exposed to a decline in demand in China, and the RBNZ will not remain neutral to a strengthening of its currency.

"Short rates are already pointing towards a decline of the NZD/USD.

Any slowdown in Chinese demand will weigh down on New Zealand's growth and reduce inflows, also weighing down on the NZD. We expect a decline of the NZD/USD to 0.64 by the end of 2017.

The RBNZ lowered its rates by 25 points for the third time this year at its 9 November meeting. As a result of this move, Governor McDermott's assistant stated that there is clearly no desire for reinforcement, as this can weigh down on trade and inflation expectations.

With the RBNZ holding the highest G10 rate at 1.75%, markets can begin to anticipate a further 25-point decline in 2017, returning to the same level as the RBA at 1.50%."