– The NZD/USD has been a casualty of a broad rally in the USD, as US bond yields have bolted higher
– But the fragility of the US recovery, not to mention rock-bottom inflation, means it’s too early to expect a sustained appreciation in the greenback
– Supportive NZD fundamentals haven’t changed; shortterm ‘fair-value’ is still in a lofty 0.8450-0.8850 range
– Watch out for a NZD/USD bounce
Widespread USD strength has been the key theme driving currency markets over the past week or so. A string of upbeat US data has helped assuage concerns about a fiscal-led slowdown in US growth momentum. At the same time, media reports suggesting the Fed is actively discussing its QE exit strategy have rattled US bond markets, underpinning a 10-20bps bolt higher in yields.
Click here to read the full report: FX Daily
BNZ