Forex Flash: NZ prime minister sees NZD/USD as overvalued – UBS

Overnight, New Zealand's Prime Minister Key said the NZD/USD is overvalued, however that the AUD/NZD is still within its normal band. According to Research Analyst Gareth Berry at UBS, “We expect this cross to continue to trade heavy over the coming months as the relative stance of monetary policy shifts in the kiwi's favor.”

In addition, “we remain short AUD/NZD as a trade recommendation via a put spread (downside strike at 1.1666) – a relatively upbeat policy statement from the RBA on Tuesday is likely to provide a good entry level for investors who missed the selloff on Friday.”