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12 Nov 2014
NZD above fundamental fair value - ANZ
FXStreet (Barcelona) - Sam Tuck, Senior FX Strategist at ANZ suggests a medium term bearish outlook for NZD/USD in lieu of the fundamentally bullish USD and fundamentally overvalued NZD.
Key Quotes
“NZ cyclical factors stabilised in October, suggesting that for November it will be prudent to take a cautious approach and sell rallies. For Importers we would view strength toward the top of the range as an opportunity to increase both the duration and scale of hedging, while we would expect exporters to take advantage of dips for immediate hedges, but keep hedging duration short.”
“The NZD is above fundamental fair value. ANZ’s calculations imply a valuation in the low 0.70s as being “fair”. NZD/USD is relatively close to cyclical fair value. Cyclical factors have stabilised over October."
"Technically, NZD/USD remains a sell on rallies, although on a monthly basis range trading looks set to continue, with the range broadly 0.7650 – 0.8050.”
Key Quotes
“NZ cyclical factors stabilised in October, suggesting that for November it will be prudent to take a cautious approach and sell rallies. For Importers we would view strength toward the top of the range as an opportunity to increase both the duration and scale of hedging, while we would expect exporters to take advantage of dips for immediate hedges, but keep hedging duration short.”
“The NZD is above fundamental fair value. ANZ’s calculations imply a valuation in the low 0.70s as being “fair”. NZD/USD is relatively close to cyclical fair value. Cyclical factors have stabilised over October."
"Technically, NZD/USD remains a sell on rallies, although on a monthly basis range trading looks set to continue, with the range broadly 0.7650 – 0.8050.”