Outlook for the antipodeans - Westpac

Analysts at Westpac offered their market outlooks for the antipodeans.

Key Quotes:

"AUD/USD 1 day:  Consolidating in a 0.7440-0.7500 range.

AUD/USD 1-3 month: The modestly weaker than expected Australian CPI outcome has added yet another factor capping the A$: softer commodity prices; a more protectionist stance from US President Trump, and higher US yields if the Fed raises rates in June as we expect. These leave the A$ with strong resistance at 0.76. We expect to see it heading towards 0.74 by year end. (26 Apr)

NZD/USD 1 day: Consolidating in a 0.6850-0.6900 range, but vulnerable to breaking lower.

NZD/USD 1-3 month:  The Fed’s tightening cycle plus US fiscal expansion should maintain upside pressure on US interest rates and the US dollar, pushing NZD/USD down towards 0.6900. The RBNZ’s persistent reminders it is on hold for a long time should also weigh. (19 Apr).

AUD/NZD 1 day: Momentum remains positive, targeting the 1.0950-1.1000 area next.

AUD/NZD 1-3 month: Higher to 1.10. The cross remains well below fair value estimates implied by interest rates, commodity prices and risk sentiment, although is closing the gap (6 Mar).

AU swap yields 1 day: The 3yr should open at around 2.97%, the 10yr around 2.85%.

AU swap yields 1-3 month: Our RBA outlook is anchoring front end valuations. We expect 3yr swap rates to remain in a 2% to 2.3% range, with core inflation still below 2%,. (26 Apr)

NZ swap yields 1 day: NZ 2yr swap rates should open unchanged at 2.30%, the 10yr also unchanged at 3.37%.

NZ swap yields 1-3 month: The RBNZ said it has ended its easing cycle and will remain on hold until 2020. That will anchor the short end, although markets will not abandon their expectations for earlier tightening which means occasional spikes in the 2yr will be likely. The long end will continue to follow mainly US yields, which we expect to rise. That means the curve steepening trend should continue. (17 Feb)"