AUD/NZD to push above 1.06 – Westpac
Sean Callow, analyst at Westpac, notes that the AUD/NZD cross has declined almost without interruption from late Jan to late March, reaching lows since Sep 2016 (ex-flash crash).
Key Quotes
“The RBA’s formal switch from a mild tightening bias to a more balanced outlook on the cash rate produced a step lower in the cross, though the net change in AU-NZ yield spreads was not significant in this time.”
“The trend was only interrupted by the RBNZ’s unexpected flip from neutral to an easing bias, even after a decent New Zealand Q4 GDP report. Near term, we expect the kiwi to remain undermined by the impression that every RBNZ meeting is now “live” for a rate cut. Indeed Westpac now expects a cut on 8 May.”
“The RBA meanwhile, appears on track to deliver a rate cut in August (Westpac’s base case), with pricing for a move before then likely to be moderate as the RBA Board takes time to reassess what is still officially a bullish Australian growth outlook.”
“In coming weeks, markets should focus on the prospect of the RBNZ cutting rates before the RBA, helping AUD/NZD push to above 1.06. Relative commodity prices continue to imply significantly higher trading ranges for AUD/NZD.”
Author
Sandeep Kanihama
FXStreet Contributor
Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.
