NZD/USD has downside risk - Westpac

Election uncertainty started to weigh on the NZD after the first poll on 17 Aug showing the gap between National and Labour had closed, according to Imre Speizer, Research Analyst at Westpac.

Key Quotes

“We can see this in the declining residuals in a NZD/USD fair value model. Since the election, those residuals have decreased slightly further, indicating the uncertainty may have intensified further.”

“When the governing group is confirmed, a reaction is likely, depending on whether it is a left or right-leaning one.”

“Until then, NZD/USD has downside risk, a break below 0.7130 signalling 0.7050.”