NZD fair value estimate pushed up to 0.7590 - BNZ
|Jason Wong, Senior Market Strategist at BNZ, suggests that rising risk appetite has pushed their fair value estimate for NZD up to 0.7590, but they still have some doubt over whether it will reach such a height this year.
Key Quotes
“The NZD remains vulnerable to any negative news, with net speculative long positioning remaining near a four-year high. The last time speculative positioning was this one-sided, in April 2013, the NZD fell from 0.86 to 0.77 or around 10% over the subsequent three months.”
“Looking at the week ahead, locally the focus turns to tomorrow’s Q2 CPI release. We expect a soft result of 0.1% q/q and 1.8% y/y (below the RBNZ’s pick back in May of 2.1% y/y, which didn’t have the benefit of knowing the recent tumble in oil prices). While a soft result is widely anticipated, speculative positioning in the NZD has been increasing on the view that the RBNZ will be soon following the Bank of Canada in moving to a tightening bias and then tightening. We don’t buy that view and see the RBNZ maintaining a neutral stance for some time. If anything, inflation is tracking below its projections, given the combination of a stronger NZD and lower oil prices. The CPI data should confirm this view.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.