NZD: Chance for a further relief rally up to 0.72 - BNZ

Jason Wong, Currency Strategist at BNZ, suggests that the commodity currencies have outperformed in this risk-on environment.

Key Quotes

“NZD blasted through the 0.71 mark yesterday afternoon and has tracked largely sideways since then.

While much of the rally we expected post the referendum assuming the status quo has now already occurred, there’s a chance for a further relief rally up to 0.72. That said, our short-term fair value model suggests that the NZD is becoming stretched, with the valuation gap approaching 10%, the highest it has been all year. The model has under-predicted the NZD by an average 5% all year and taking into account this bias, the 0.68 handle at present would be a much fairer price in our view.”