NZDUSD still undervalued - Westpac

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Nov 30, 2015.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
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    FXStreet (Delhi) – Imre Speizer, Senior Markets Strategist at Westpac, suggests that according to their short term fair value model, the NZD/USD remains undervalued by around 6 cents, as it has been for the past six weeks.

    Key Quotes

    “Our fair value range is 0.70-0.72, based on the NZ-US interest rate spread, commodity prices and risk sentiment. Significant NZD/USD undervaluation has persisted since mid-2015.”

    “One explanation is the US dollar’s overvaluation, markets pricing more Fed tightening into the US dollar than is implied by US interest rates. NZ dairy prices risk bouncing at the next auction on Tuesday night. WMP futures contracts are predicting an 8% rise at this juncture, with the more distant contracts also implying a medium term bottom has been formed. Markets are trying to find an equilibrium ahead of a looming El Nino-induced drought.”
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