* A sustained USD rally and NZ commodity price correction are still expected to deliver a lower NZD/USD next year
* Our short-term valuation model estimates the end of Fed QE would knock around 6 cents off the ‘fair-value’ of the NZD/USD. A 7% commodity price ‘correction’ would shave off another 2 cents
* If this analysis is to be believed our end 2014 forecast of 0.7600 looks about right
* Admittedly, recent developments have placed upside risk on our NZD/USD forecast track. Fed tapering looks set to be delayed again and NZ commodity prices may hold up at elevated levels for longer
Read full report: FX Research
BNZ