AUD/NZD cross outlook and rates outlook - Westpac

Analysts at Westpac offered their outlook for the antipodean cross and rates.

Key Quotes:

"AUD/NZD 1 day: Retains potential to break above 1.1020 as NZ election uncertainty persists, although iron ore’s renewed slide is a counterforce.

AUD/NZD 1-3 month: September’s downward correction should give way to a resumption of the trend rise which started in June, and test 1.12, contingent on AU commodity prices recovering and risk sentiment remaining elevated. (4 Oct)

AU swap yields 1 day: The 3yr should open around 2.16%, the 10yr around 2.97%.

AU swap yields 1-3 month: Our RBA outlook (on hold throughout 2018) 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. (4 Oct).

NZ swap yields 1 day: NZ 2yr swap rates should open unchanged 2.20%, the 10yr down 1bp at 3.25%, in response to AU and 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 2.5% range, as long as inflation remains below 2%.  Longer maturity rates will largely follow US rates. (4 Oct)"

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