After retesting the 0.96 area last week, the NZD/AUD cross has started to reverse lower and the main catalyst has been better Australian economic data, notably last week’s jobs report explains Imre Speizer, Research Analyst at Westpac.
“The acceleration in Australia’s job creation to 2% y/y makes RBA rate cut talk even less plausible and places pressure on AUD speculative shorts (leveraged funds swung to net short in late May).”
“This week there’s little to watch. RBA June meeting minutes are on Tuesday, but the data calendar goes quiet, with nothing that could move AUD.”
“3 months ahead: Fair value for the cross has risen to around 0.92, following this year’s sharp decline in iron ore prices. We see that as a fair target for the remainder of 2017.”
“Potentially supports for the AUD include the Chinese authorities’ eagerness to counter the negative headlines over Moody’s sovereign downgrade. In addition, the strength of steel reinforcing bar (rebar) prices suggests iron ore should eventually play catch-up.”
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