AUD/NZD: Positive Momentum but Cose to a Turning Point - Westpac
Imre Speizer, Senior Market Strategist at Westpac, suggests that the
NZD/AUD momentum remains positive and could push it a little higher to
around 0.9400, but we are probably also close to a turning point.
“Barring a risk-averse global shock, relative interest rates argue NZD/AUD has risen enough. Markets have priced both the RBA and RBNZ as 80% chances for a rate cut during the next few months, which seems fair. The Australian calendar will be important. First, the minutes from the 3 May Board meeting (Tue) will be watched closely, with any clues on RBA thinking of great market interest. Then we have Q1 wages on Wed and Apr employment on Thu 19th.
3 months: We target 0.88 multi-month because the cross is trading well above fair value implied by relative interest rates, commodities and risk sentiment. A major risk to this view would be a global shock (for example from China), those typically affecting the AUD more than the NZD.
1 year: Our economic fundamentals based forecast is 0.87.”