NZD: Guided by the market forces - Westpac

Imre Speizer, Research Analyst at Westpac notes that NZD/USD was the worst performing major currency last week which coincides with the latest NZ election poll showing it could be a close race on 23 September.

Key Quotes

“Our fair value model supports the idea that a new factor has popped into the mix to depress the NZD. Accounting for movement in drivers such as commodities and risk sentiment during the past week, NZD/USD has flipped from a slightly overvalued state to 3% below fair value.”

“We maintain our long-held expectation that shrinking NZ-US yield spreads will depress NZD/USD, targeting 0.70 by year end.”