According to Imre Speizer, Research Analyst at Westpac, the NZD/AUD cross has sustained its break below key support at 0.9280, that break signalling a move to 0.8800 during the next few months.
“This week, lower dairy prices should help the trend continue, and there’s even a case for the RBNZ to sound more dovish.”
“This week’s Australian data calendar goes quiet, but we hear quite a bit from the RBA: Mar meeting minutes (Tue) and speeches by Ellis and Debelle.”
“The AUD has been subject to mixed news lately: the latest setback being Australia’s Feb employment data, which included a 13 month high for the unemployment rate, another month of sub-1% y/y jobs growth, and soft hours worked. The interest rate market’s flirtation with a Q4 rate hike is (rightly) fizzling out. But against that, iron ore has rebounded above $90/tonne just 8 weeks before the budget and global risk sentiment remains elevated.”
“3 months: NZD/AUD is starting to reflect the outperformance of AU commodities as well as better AU economic data ahead. We target the 0.8800 area multi-month, which coincidentally is close to fair value according to our model which captures interest rates, commodities, and risk sentiment. The cross is now only 4% overvalued, compared to 9% late last year.”