NZD/USD: The range should hold over the week - BNZ

Jason Wong, senior markets strategist at BNZ markets point out that the NZD/USD pair is currently near the middle of the range over the past couple of months defined by support and resistance of 0.6480-0.6680.

Key Quotes: 

“Our short-term fair value model estimate nudged up to 0.6800, supported by higher risk appetite, as risk assets were buoyed by heightened expectations of easier Fed policy. The model was also supported by a higher NZ-US short rate spread. Whilst NZ rates fell to fresh record lows last week, they haven’t kept pace with US rates over the past four weeks, with the NZ-US 1-year swap rate up 21bps over that timeframe. Falling NZ commodity prices are negatively impacting fair value for the NZD, with dairy prices heading lower.”

“The technical picture shows support and resistance defined by 0.6480-0.6680 for the NZD, with current spot close to the middle of the range. The beginning of the week looks fairly quiet, until the RBNZ release on Wednesday afternoon. The range should hold, with the G20 meeting of greater importance for how the NZD will
fare over the second half of the year.”