BNZ Flag Upside Risks

BNZ note that "the NZD is on a roll. After NZD/USD broke 0.70 we consider the chances of breaking D0.80. The path to 0.80 actually isn't particularly onerous. All it would require is for the USD to remain out of favour and continue to drift lower; the global economic recovery to remain on track, supported by the rollout of the forthcoming vaccines; and commodity prices to continue to be well supported. Our current long-term fair value estimate remains at 0.73 and that can stretch to 0.82 if we considered NZ's current near-record high terms of trade. Our last published projections of the NZD showed the currency settling at 0.73 in eighteen months (which in practice means a trading range extending to 0.75). There is clear upside risk, with these levels being reached earlier than that."