NZD/USD bounce looking likely to extend to at least 0.6980 - Westpac

NZD/USD made a three-year low at 0.6780 last week, the ensuing bounce looking likely to extend to at least 0.6980 (the early Nov high), according to Imre Speizer, Research Analyst at Westpac. 

Key Quotes

“NZD/USD is undervalued following a sharp election-related selloff; and speculators are very short NZD.”

“In addition, the surprising easing of LVR restrictions by the RBNZ poses upside risks to NZ housing forecasts, with a modest upward impact on OCR forecasts.”

“Multi-month though, our view remains negative, resting largely on NZ-US interest rate spread shrinkage persisting into next year.” 

“If that proves correct, we should see NZD/USD below 0.67 multi-month.”