Outlooks for the antipodeans and rates - Westpac

Ross J Burland FXStreet

Analysts at Westpac offered outlooks for the antipodeans and rates.

Key Quotes:

"AUD/USD 1 day: In a more neutral state after yesterday’s sudden bounce, and likely to hold around the low 0.7500’s ahead of this afternoon’s critical (for the RBA) CPI data. Tonight’s FOMC presents additional major risk.

AUD/USD 1-3 month: The uncertainty generated by Brexit plus further RBA easing should be negative for the AUD during the months ahead. We target sub-0.72.

NZD/USD 1 day: In a more neutral state after yesterday’s sudden bounce, and likely to hold above 0.7000 ahead of this afternoon’s AU CPI data. Tonight’s FOMC presents additional major risk.

NZD/USD 1-3 month: The uncertainty generated by Brexit plus further RBNZ easing should be negative for the NZD. We target 0.67.

AUD/NZD 1 day: Consolidating July’s gains in a 1.0600-1.0770 range, today’s AU CPI data posing major event risk.

AUD/NZD 1-3 month: We expect both the RBA and RBNZ to cut their policy rates in August, to 1.5% and 2.0% respectively. Relative central bank paths are thus neutral for the cross. Multi-month, though, there is a case for higher, towards 1.0800, given it is currently well below fair value implied by interest rates, commodity prices and risk sentiment.

AU swap yields 1 day: The 2yr should open around 1.76% while the 10yr should open around 2.19%.

AU swap yields 1-3 month: If the RBA cuts to 1.5% as we expect, then the 2yr should eventually find a base around 1.7%. However the main risk is that markets expect a sub-1.5% cash rate.

NZ swap yields 1 day: NZ 2yr swap rates should open 1bp higher at 2.06% while the 10yr should open unchanged at 2.46%.

NZ swap yields 1-3 month: Slightly lower. The OCR should be cut to 2.0% in August, but the risks are it could fall further later on, which means the 2yr could test 2.00%."

Author

Ross J Burland

FXStreet

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

EUR/USD flirts with daily highs, retargets 1.1900

EUR/USD regains upside traction, returning to the 1.1880 zone and refocusing its attention to the key 1.1900 barrier. The pair’s slight gains comes against the backdrop of a humble decline in the US Dollar as investors continue to assess the latest US CPI readings and the potential Fed’s rate path.

GBP/USD remains well bid around 1.3650

GBP/USD maintains its upside momentum in place, hovering around daily highs near 1.3650 and setting aside part of the recent three-day drop. Cable’s improved sentiment comes on the back of the Greenback’s irresolute price action, while recent hawkish comments from the BoE’s Pill also collaborate with the uptick.

Gold holds above $5,000 as bears seem hesitant amid Fed rate cut bets

Gold edges lower at the start of a new week, though it defends the $5,000 psychological mark through the Asian session. The underlying bullish sentiment is seen acting as a headwind for the bullion. However, bets for more rate cuts by the Fed, bolstered by Friday's softer US CPI, keep the US Dollar bulls on the defensive and continue to support the non-yielding yellow metal as the focus now shifts to FOMC Minutes on Wednesday.

Week ahead: Data blitz, Fed Minutes and RBNZ decision in the spotlight

The US jobs report for January, which was delayed slightly, didn’t do the dovish Fed bets any favours, as expectations of a soft print did not materialize, confounding the raft of weak job indicators seen in the prior week.

Global inflation watch: Signs of cooling services inflation

Realized inflation landed close to expectations in January, as negative base effects weighed on the annual rates. Remaining sticky inflation is largely explained by services, while tariff-driven goods inflation remains limited even in the US.

Ripple Price Forecast: XRP potential bottom could be in sight

Ripple edges up above the intraday low of $1.35 at the time of writing on Friday amid mixed price actions across the crypto market. The remittance token failed to hold support at $1.40 the previous day, reflecting risk-off sentiment amid a decline in retail and institutional sentiment.