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8 Jul 2013
Flash: NZD/USD short-term valuation at 0.7750-0.8150 – BNZ
FXstreet.com (New York) - According to the BNZ Research Team, “Our short-term valuation model, NZD/USD ‘fair-value’ has remained steady over the past week, at 0.7750-0.8150.”
However, negative momentum, a bearish technical picture, and increasingly positive USD sentiment means we wouldn’t be surprised to see the NZD/USD continue to track below ‘fair-value’ in the short-term. Moreover, “a convincing break below range-bottom support at 0.7685 would likely trigger another wave of selling.” the team adds.
The biggest impediment to further downside progress is probably the positioning of the speculative community. This is already heavily skewed towards expecting further weakness. Ultimately, speculators’ net short NZD position will have to be (at least partially) squared up. We suspect the catalyst for such is more likely to come from the US, than NZ, where exchange rate ‘fundamentals’ are already fairly positive.
However, negative momentum, a bearish technical picture, and increasingly positive USD sentiment means we wouldn’t be surprised to see the NZD/USD continue to track below ‘fair-value’ in the short-term. Moreover, “a convincing break below range-bottom support at 0.7685 would likely trigger another wave of selling.” the team adds.
The biggest impediment to further downside progress is probably the positioning of the speculative community. This is already heavily skewed towards expecting further weakness. Ultimately, speculators’ net short NZD position will have to be (at least partially) squared up. We suspect the catalyst for such is more likely to come from the US, than NZ, where exchange rate ‘fundamentals’ are already fairly positive.