AUD/NZD: on the way to 1.09 - Westpac

Analysts at Westpac offered their insight to AUD/NZD and rates.

Key Quotes:

"AUD/NZD 1 day: Higher towards 1.0900 multi-day, global risk-aversion fading (AUD is more sensitive).

AUD/NZD 1-3 month: Higher to 1.10. The cross remains well below fair value estimates implied by interest rates, commodity prices and risk sentiment, although is closing the gap (6 Mar).

AU swap yields 1 day: The 3yr should open at around 2.01%, the 10yr around 2.87%.

AU swap yields 1-3 month: Our RBA outlook is anchoring front end valuations. We expect 3yr swap rates to remain in a 2% to 2.3% range, with core inflation still below 2%,. (26 Apr)

NZ swap yields 1 day: NZ 2yr swap rates should open down 1bp at 2.31%, the 10yr down 2bp at 3.38%.

NZ swap yields 1-3 month: The RBNZ said it has ended its easing cycle and will remain on hold until 2020. That will anchor the short end, although markets will not abandon their expectations for earlier tightening which means occasional spikes in the 2yr will be likely. The long end will continue to follow mainly US yields, which we expect to rise. That means the curve steepening trend should continue. (17 Feb)"