Research Team at ANZ, suggests that the commodity bloc currencies have surprised them with their resilience. Key Quotes “Recent strength can certainly be explained with reference to relatively stable domestic conditions across all three markets. While all markets are pricing easing, for instance, none of the central banks seem particularly inclined to deliver into that. The recent rally in both oil and iron prices has also helped CAD and AUD directly, though to the extent that oil prices have been a broader driver of markets, that has helped to lift all boats. The reality, however, is that these moves are taking commodity currencies further away from any reasonable calibration to fair value. NZD is overvalued by 11.6%, which is not all that far below last April’s valuation extreme of 16.3%. The AUD is not as overvalued (9.6%). But apart from the height of the reserve diversification thematic in 2012, the AUD is essentially as overvalued as it has ever been. While it is difficult to see the immediate catalyst for an imminent decline in either the AUD or NZD, and it is certainly true that the multi-year declines in AUD and NZD appear to be quite mature, these sorts of metrics suggest there is still further downside from current levels in trade weighted terms before the current deprecation cycle completes.” For more information, read our latest forex news.