NZD/USD: There is scope for mild further appreciation – ANZ NZDUSD CarryTrade Banks
funds rate does go up one more time, it’ll get close to where the OCR is. It won’t surpass it, but we are certainly not talking about a situation where the NZD has significantly higher carry than the US. For the moment there is small positive spread in NZ’s favour, but what’s more important is that the NZD is the only currency for which that’s the case. That might not mean a lot in NZD/USD terms, but if anyone does want to go short the USD, then the Kiwi is an obvious currency to pick.
“At the moment, when we apply a one standard deviation band, we get a 0.60 to 0.71 range. Right now, we are inside those bands. But NZD/USD is below both our spot and forward estimates of fair value, and closer to the lower standard deviation band than it has been for some time. As a gravitational pull factor, that suggests there is scope for mild further appreciation.”Information on these pages contains forward-looking statements that involve risks and uncertainties.
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