TD Research discusses the latest readings from its 'HFFV' high-frequency fair-value models which suggest buying opportunities in NZD/USD, and GBP/USD.
"The markets are back in repair mode again after policymakers played nice at the G7. We still think this backdrop relies on sentiment and positioning than any real progress in the trade wars. For the G10, this backdrop should offer some a short window to fade some of the stress, emphasizing the gaps across HFFV. We note NZD, GBP, EUR, and AUD look cheap," TD notes.
"What to buy? NZD screens at a massive discount, which against current levels sits around 3.5%. In other words, NZDUSD should be trading around 0.66, making it the cheapest currency in the G10.
GBP runs next. It's trading at a 2.5%, and we finally see some scope to reduce this risk premium if Brexit headlines sound a bit more constructive this week. Still, we think rallies should get capped ahead of 1.25," TD adds.