AUD/NZD: RBA to be the Main Influence on Near Term Direction - Westpac
AUD/NZD: RBA to be the Main Influence on Near Term Direction - Westpac
Imre Speizer, Senior Market Strategist at Westpac, suggests that it’s a
big week for AUD/NZD cross, with the RBA likely to be the main influence
on near term direction.
Key Quotes
“The
RBA statement (Tue) is seen as 50% likely to deliver a rate cut. Either
way, a sharp response from the AUD is assured. Our forecast is for an
on-hold decision, which would push AUD/NZD lower, but until then it
should remain in an elevated 0.92-0.93 range.
The busy AU
calendar also includes Apr house prices, AiG Apr manufacturing PMI, Apr
MI inflation gauge and the Apr NAB business survey on Mon. On Tue
morning, Mar building approvals will be overlooked ahead of the RBA, and
then at 7:30pm, we will see the annual federal budget. On Thu there’s
Mar trade balance and Mar (and Q1 real) retail sales.
3 months:
Our main argument for a lower cross (sub-0.88 multi-month) is that the
RBNZ is expected to ease again by June, whereas the RBA should remain on
hold. Risks to this view include the performance of the Chinese economy
and global commodities, which typically affect the AUD more than the
NZD.
1 year: We expect the cross to trade at 0.86 or below in a year’s time, the interest rate spread expected to favour the AUD.”
