FXstreet.com (Barcelona) - As NZ-AU 3-year swap spreads have increased (less negative) by almost 70bps, the AUD/NZD has failed to follow them lower if one is to be guided by historical relationships, says Mike Jones, FX currency strategist at Bank of New Zealand.
Miek explains that the current divergence from ‘fundamentals’ may be partly explained by "diversification flows and AAA-related demand for the AUD, speculative positioning as IMM data shows that the speculative community got excessively short AUD/NZD
in June."
All in all, Mike thinks "a modest trend lower in AUD/NZD over the remainder of this year" is still the most likely outcome, adding that "current levels look relatively attractive for exporters thinking about hedging."
"The fact AUD/NZD spot and AUD/NZD forward points have moved in different directions is unusual, and is another reflection of the current divergence between the NZ-AU interest rate and currency markets" the BNZ analyst concludes.
Miek explains that the current divergence from ‘fundamentals’ may be partly explained by "diversification flows and AAA-related demand for the AUD, speculative positioning as IMM data shows that the speculative community got excessively short AUD/NZD
in June."
All in all, Mike thinks "a modest trend lower in AUD/NZD over the remainder of this year" is still the most likely outcome, adding that "current levels look relatively attractive for exporters thinking about hedging."
"The fact AUD/NZD spot and AUD/NZD forward points have moved in different directions is unusual, and is another reflection of the current divergence between the NZ-AU interest rate and currency markets" the BNZ analyst concludes.
