NZD: Starting To Look Rather Cheap; Pricing In A Lot Of Bad News – NAB

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The kiwi dollar has been on the back foot since the Reserve Bank of New Zealand slashed interest rates by 50 basis points a few months ago.

Here is their view, courtesy of eFXdata:

NAB Research discusses NZD outlook and highlights that NZD/USD screens cheap on its valuation model metrics.

The currency is looking rather cheap on our short-term fair value model. Our model estimate bottomed around 0.65 in August and has pushed up to above 0.68, driven by higher risk appetite and higher NZ commodity prices. Last week, the gap between the spot rate and fair value was as much as 7%, the greatest deviation on this model since 2013. CFTC data show historically large net short speculative positioning in the NZD,” NAB notes.

“This suggests that the NZD is pricing in a lot of bad news and it wouldn’t take much to see the pair break higher,” NAB adds.

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Yohay Elam – Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I’ve accumulated. After taking a short course about forex. Like many forex traders, I’ve earned the significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I’ve worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.