Antipodean FX and rates outlook - Westpac

Analysts at Westpac explained their outlook for the antipodeans and rates.

"Key quotes:

"AUD/NZD 1 day: Positive momentum from the strong AU jobs data plus NZ election polls threatens the 1.11 area, although any new North Korean headlines will counter.

AUD/NZD 1-3 month: A retest of the 1.1200 area seen in April is possible if iron ore’s rally since mid-June continues and global risk sentiment remains elevated. (4 Sep)

AU swap yields 1 day: The 3yr should open around 2.19%, the 10yr around 2.94%.

AU swap yields 1-3 month: Our RBA outlook (on hold for some time) is anchoring short-maturity interest rates and should keep 3yr swap rates in a 1.8% to 2.3% range, as long as core inflation remains below 2%. Longer maturity rates will largely follow US rates. (8 Aug).

NZ swap yields 1 day: NZ 2yr swap rates should open unchanged at 2.19%, the 10yr possibly up 1bp at 3.17%, in response to US interest rates movement overnight.

NZ swap yields 1-3 month: Our RBNZ outlook (on hold throughout 2018) is anchoring short-maturity interest rates and should keep 2yr swap rates in a 2.1% to 2.6% range, as long as inflation remains below 2%.  Longer maturity rates will largely follow US rates. (8 Aug)"

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