NZD/USD retains downside potential - Westpac

NZD/USD retains downside potential, with a sustained period below 0.7200 required to add technical confidence to the view, according to Imre Speizer, Research Analyst at Westpac. 

Key Quotes

“We suspect the uncertainty regarding the outcome of the election on 23 Sep has been weighing on the NZD, citing two pieces of evidence. First, NZD/USD usually moves inversely to the broad USD index, unless there are significant NZ factors at play. The USD index is falling from mid-August, but NZD/USD not following suit and falling instead. Second, our fair value model shows NZD/USD shifted from fair to 3c undervalued from mid-August. The first poll showing Labour surging towards parity with Nationals was on ... 17 August.”