NZD/USD driven by NZ politics - Westpac

NZD/USD continues to grind lower, driven partly by NZ politics and partly by a resurgent US dollar, targeting 0.6820 next, according to Imre Speizer, Research Analyst at Westpac.

Key Quotes

“Regarding the former, NZD/USD has fallen by 4.4 cents since mid-August when the first surprise polls were released showing Labour was in with a chance. According to our fair value model, the US dollar, interest rates, commodities and risk appetite have accounted for only 0.5 cents of that fall. The strong suspicion is that NZ politics (polls, election, government formation, policy announcements) accounted for the rest.”

“Further ahead, we expect that NZD/USD will fall below 0.68 by year end, driven by a continuing decline in NZ-US interest rate spreads.”