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10 Nov 2014
NZD downside momentum is building – TD Securities
FXStreet (Barcelona) - Annette Beacher of TD Securities sees NZD weakening in 2015 due to the dovish stance by RBNZ while forecasting AUD to outperform NZD by 2015.
Key Quotes
“With +100bps on the table, the market perceives the RBNZ as being pre-emptive while the Fed is expected to do some of the heavy lifting next year. Our US team expects the Fed to begin raising rates from September 2015, with the risks tilted towards an earlier move. This dovish RBNZ/hawkish Fed therefore clearly argues for a weaker NZD in 2015.”
“The AUDNZD is not expected to break out of its near-term 1.093-1.13 range with both the RBA and RBNZ expected to remain on hold for many months as both face low commodity prices and low inflation. Support at the 100d ma is 1.1014. Similarly, CFTC non-commercial positioning is already heavily skewed towards short NZD”
“Looking ahead, the risks remain tilted towards the NZD weakening vs the AUD. The OIS strip is pricing a 66% chance the RBNZ hikes +25bps by September 2015, and could be priced out if RBNZ shifts to an explicit neutral bias. In contrast, OIS for the RBA is still insisting on a 35% chance of –25bp at the same time, and pricing out those expectations (to flat) should see the AUD outperform against the NZD by mid-2015 and we target 1.15.”
Key Quotes
“With +100bps on the table, the market perceives the RBNZ as being pre-emptive while the Fed is expected to do some of the heavy lifting next year. Our US team expects the Fed to begin raising rates from September 2015, with the risks tilted towards an earlier move. This dovish RBNZ/hawkish Fed therefore clearly argues for a weaker NZD in 2015.”
“The AUDNZD is not expected to break out of its near-term 1.093-1.13 range with both the RBA and RBNZ expected to remain on hold for many months as both face low commodity prices and low inflation. Support at the 100d ma is 1.1014. Similarly, CFTC non-commercial positioning is already heavily skewed towards short NZD”
“Looking ahead, the risks remain tilted towards the NZD weakening vs the AUD. The OIS strip is pricing a 66% chance the RBNZ hikes +25bps by September 2015, and could be priced out if RBNZ shifts to an explicit neutral bias. In contrast, OIS for the RBA is still insisting on a 35% chance of –25bp at the same time, and pricing out those expectations (to flat) should see the AUD outperform against the NZD by mid-2015 and we target 1.15.”