AUD/NZD: Trading ranges to tilt a little higher with broad range of 1.0350-1.0550 - Westpac

Sandeep Kanihama FXStreet Contributor

Sean Callow, Research Analyst at Westpac, expects AUD/NZD trading ranges to tilt a little higher in coming weeks and the broad range should be in between 1.0350-1.0550 levels.

Key quotes

“The strong outperformance of New Zealand’s commodity export basket over Australia’s in recent weeks has backed the fall in AUD/NZD since April. This has been most evident in the contrast between the steep slide in iron ore prices and resilient dairy prices.”

“This was the main driver of the 5-6 cent tumble in our fair value estimate of AUD/NZD, to around 1.08 this month. Still, the spot fall leaves the pair undervalued and iron ore is now showing some signs of life.”

“Commodities will remain in close focus for AUD/NZD near term, given the firmly neutral message from both the RBA and RBNZ. However, the market’s persistent desire to price in risks of RBNZ tightening ahead of the RBA leaves the kiwi somewhat exposed to dovish surprises in NZ. Q2 CPI on 18 July may be one example.”

“With spec positioning also warning of excessive kiwi bullishness, we expect AUD/NZD trading ranges to tilt a little higher in coming weeks. The broad range should be 1.0350-1.0550 but with 1.06 more likely to trade than 1.03.”

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.

EUR/USD weakens below 1.1700 as Middle East tensions drive US Dollar strength

The EUR/USD pair trades with mild losses around 1.1685, the lowest since late January, during the early Asian session on Tuesday. The US Dollar gathers strength against the Euro as escalating tensions in the Middle East boost safe-haven currencies. The preliminary reading of the Harmonized Index of Consumer Prices from the Eurozone will be published later on Tuesday.

GBP/USD hits new yearly lows near 1.3300

GBP/USD adds to the recent bearish tone, approaching to the key 1.3300 support to reach fresh YTD troughs against the backdrop of the robust performance of the US Dollar. Indeed, Cable’s decline comes amid the firm demand for the safe-haven space in the wake of the US and Israel attacks to Iran.

Gold clings to gains as US-Iran conflict continues to underpin safe-haven assets

Gold retains positive bias for the fifth consecutive day on Tuesday as rising geopolitical tensions in the Middle East continue to underpin safe-haven assets. However, a bullish US Dollar could keep the bullion below its highest level since late January, set on Monday, warranting caution before positioning for any further appreciation.