Forex Flash: AUD/NZD expected around 1.1360 by year end - BNZ

According to Currency Strategist at BNZ, Mike Jones, “the latest update of our short-term NZD/AUD valuation model points to a 0.8050-0.8250 ‘fair-value’ range,” which represents a 1.2422-1.2121 “fair value” range for AUD/NZD, when the cross is last at 1.2161, near fresh 2.5-year lows, following better than expected 4Q NZ retail sales, best in 1 year.

“This suggests we’ll need to see further improvement in NZ-AU ‘fundamentals’ for the cross to sustain near-term gains above 0.8250,” the analyst adds, what would be the low band of the AUD/NZD cross in that multi-year wide range since late 2009 below the 1.2121. “Our mid-year forecast is 0.8500, with 0.8800 expected by year-end,” Mike concludes, or an AUD/NZD cross at 1.1360, which would need a Kiwi at 30-year highs around 0.88s USD 2011 highs, while Aussie would have to be around parity with USD, for example.