The Westpac Research Team suggests high conviction FX trades based on their macro, model and technical views, targeting 0.72 levels for AUD/USD and 0.6850 levels for NZD/USD.
Key Quotes
“For AUD, our model signal highlights higher volatility readings, falling yield signals, a weak growth pulse and overvaluation versus falling commodity prices.”
“Our macro views are also very much in line here. Prior to today's RBA cut we had argued for a drop towards the 0.75/ 0.76 level. The tone in today's statement around the economy and the currency suggests the RBA would be happy to see such a fall.”
“Technically, we have an interim target for the A$ at 0.72.”
“For the NZD, our model highlights ongoing long term valuation risks.”
“From a macro perspective, there is currently about 20bps of easing priced in and we see plenty of scope for this to increase.”
“Another negative factor is the lower dairy production this year as a result of the drought. We target 0.7100 by March.”
“Finally, our interim technical target is 0.6850.”
Key Quotes
“For AUD, our model signal highlights higher volatility readings, falling yield signals, a weak growth pulse and overvaluation versus falling commodity prices.”
“Our macro views are also very much in line here. Prior to today's RBA cut we had argued for a drop towards the 0.75/ 0.76 level. The tone in today's statement around the economy and the currency suggests the RBA would be happy to see such a fall.”
“Technically, we have an interim target for the A$ at 0.72.”
“For the NZD, our model highlights ongoing long term valuation risks.”
“From a macro perspective, there is currently about 20bps of easing priced in and we see plenty of scope for this to increase.”
“Another negative factor is the lower dairy production this year as a result of the drought. We target 0.7100 by March.”
“Finally, our interim technical target is 0.6850.”
