BNP Paribas: STEER model showing NZD/USD undervalued

Our model indicates that the recent decline in NZDUSD has not been justified by its short-term fundamentals. On the contrary, the pair’s STEER has increased in response to a rise in commodity prices, higher global equities and a rise in New Zealand bond yields. As a result the STEER has increased to 0.7864; contributing to the pair’s undervaluation. Our STEER trading strategy targets a rise in NZDUSD back in line with its STEER (0.7864), with a stop-loss placed at 0.7449.

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