Antipodeans outlook: losing conviction? - Westpac
|Analysts at Westpac offered an outlook for the antipodeans.
Key Quotes:
"AUD/USD 1 day: Capped by 0.7700 and likely in a 0.7600-0.7700 range
AUD/USD 1-3 month: While further gains to around 0.77 are possible during the month ahead, driven in part by the faltering US dollar and yield-chasing flows, the AUD is losing energy (perhaps a reflection of its declining yield advantage). By year end, there’s a case for a correction towards 0.74 if the Fed tightens in December as we expect. (13 Sep)
NZD/USD 1 day: Sound rebounds faltered at 0.7330 and likely to consolidate between 0.7250-0.7330
NZD/USD 1-3 month: During the month ahead another probe above 0.75 is possible, driven by good NZ economic news, a still-vulnerable US dollar, and yield-chasing inflows. By year end, there’s a case for a correction towards 0.70 if the Fed tightens in December as we expect. (13 Sep)
AUD/NZD 1 day: Support at 1.0475-80 may allow for a retest of 1.0555
AUD/NZD 1-3 month: Risks of further losses into the 1.01-1.02 zone remain. By year-end, we expect a rebound towards 1.06, the cross well below fair value implied by interest rates, commodity prices and risk sentiment. (26 Sep)
AU swap yields 1 day: The 2yr and 10yr should open at 1.68% and 2.12% and remain low the back of global yield declines
AU swap yields 1-3 month: If the RBA sits tight at 1.5% during the remainder of this year the 2yr should eventually find a base around 1.60%. However the main risk is that markets continue to price in a sub-1.5% cash rate. (15 Aug)
NZ swap yields 1 day: NZ 2yr swap rates should open around 2.01% and 10yr at 2.48%.
NZ swap yields 1-3 month: Slightly lower. The OCR is likely to be cut to 1.75% in November. That should result in a 2yr swap rate of around 1.90%, although the risk is it could be lower if markets expect a 1.5% terminal OCR. (15 Aug)."
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