20 Mar 2015
NZD/USD seen at 0.7200 in 3-month – Danske Bank
FXStreet (Edinburgh) - Analysts at Danske Bank expect NZD/USD to grind lower and test the 0.7200 levels in a 3-month horizon.
Key Quotes
“While we believe that RBNZ will stay out of the ‘global currency war’ – _as a difference to central banks of other commodity exporting countries – _we still believe that NZD has more adjustment in store relative to the significant terms-of-trade shock suffered last year”.
“Our PPP model has a fair value estimate roughly 8% below current NZD/USD spot and with the relatively neutral NZD positioning this in itself leaves a greater downside NZD potential in an environment where the Fed is re-priced”.
“The spike in FX volatility in recent months also means that the ‘carry attractiveness’ of NZD is less than usual given the domestic economic environment”.
“In light of the recent USD performance we revise our 3M forecast lower to 0.72 (prev. 0.74) but keep our 6-12M targets unchanged”.
Key Quotes
“While we believe that RBNZ will stay out of the ‘global currency war’ – _as a difference to central banks of other commodity exporting countries – _we still believe that NZD has more adjustment in store relative to the significant terms-of-trade shock suffered last year”.
“Our PPP model has a fair value estimate roughly 8% below current NZD/USD spot and with the relatively neutral NZD positioning this in itself leaves a greater downside NZD potential in an environment where the Fed is re-priced”.
“The spike in FX volatility in recent months also means that the ‘carry attractiveness’ of NZD is less than usual given the domestic economic environment”.
“In light of the recent USD performance we revise our 3M forecast lower to 0.72 (prev. 0.74) but keep our 6-12M targets unchanged”.