The Aussie has depreciated against its New Zealand’s counterpart on Wednesday, to test key support at 1.0565 area. The FX analysis team at Westpac, however, considers that the current bearish pressure is likely to be short-lived and expects the Australian dollar to appreciate steadily through the first quarter of 2021.
“The RBA recently shifted its stance in a more dovish direction, cutting the key policy rates and significantly expanding its QE programme. In contrast, the RBNZ MPS this week will need to acknowledge the economy (especially housing) has been stronger than forecast, and while it will announce a cheap bank funding scheme (FLP), we expect signalling about a negative OCR to either remain unchanged or be softened. Yields' spreads near term should thus favour the NZD over the AUD.”
“Longer term, though, the opposite could be true, if the RBNZ cuts the OCR to -0.50% by August 2021 (our current forecast). That should push the cross to 1.10 by March 2021. (10 November).”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.