NZD/USD: Fair-value estimates have changed – NAB

By FXStreet FXStreet (Bali) – Jason Wong, Currency Strategist at NAB, notes that NZD PPP estimates have been upgraded to $US0.69 and $AU0.90, implying an AUD/NZD PPP level of $NZ1.11.

Key Quotes

“NZD/USD has overshot the PPP estimate of $US0.69 to the downside, while AUD/NZD continues to trade below PPP of $NZ1.11. These PPP estimates anchor our medium term exchange rate projections, which have changed as a result of the revision.”

“Our short-term NZD/USD model suggests current fair value is around the $US.62 mark. We project the NZD/USD to fall to around $US0.60 by mid-year, before forming a base and recovering through next year.”

“We now have two short-term AUD/NZD models.Both currently suggest fair value around the $NZ1.09-1.11 mark. We project AUD/NZD to rise this year, reaching $NZ1.13 towards the end of the year.”
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Source:: FX Street