AUD/NZD to extend recent gains toward 1.0800 – Westpac
|AUD/NZD trended lower over much of 2021. According to economists at Westpac the Reserve Bank of Australia (RBA) should affirm market expectations for 2022 rate hikes, while China’s demand for industrial commodities supports AUD/NZD, targeting 1.0800.
Relative external/commodity trend is strongly in AUD’s favour
“This week’s Australia Q4 CPI data reinforced expectations that the RBA next week will make major changes to its forecasts and rhetoric, preparing for higher rates in coming months.”
“The relative external/commodity trend is strongly in A$’s favour. Australia has run historically large trade and C/A surpluses for 4 years, whereas NZ’s C/A deficit is the widest since 2008. China’s recent tilt towards infrastructure-led growth seems likely to extend the outperformance of Australia’s industrial commodity exports.”
“We see scope for AUD/NZD to extend recent gains to 1.0800 multi-day/week.”
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