Back
26 Apr 2016
NZD/AUD: Lower to test 0.8825 - Westpac
Imre Speizer, Senior Market Strategist at Westpac, expects the NZD/AUD lower to test 0.8825.
Key Quotes
“It is hard to argue for AUD downside short term. The furious rally in iron ore and steel prices, plus by oil’s resilience, argues for an extension of existing AUD spec longs. Broadly positive domestic data adds to the case for the RBA to maintain a steady hand, even if they won’t be welcoming the AUD upswing. Australia’s Q1 CPI (Wed) dominates the calendar this week. Westpac looks for 0.4% q/q, 1.9% y/y headline inflation, 0.6% q/q for the average of the RBA core measures, leaving these at 2.0% y/y, the bottom of the band. On Thu, it’s Q1 export and import prices.
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.”
Key Quotes
“It is hard to argue for AUD downside short term. The furious rally in iron ore and steel prices, plus by oil’s resilience, argues for an extension of existing AUD spec longs. Broadly positive domestic data adds to the case for the RBA to maintain a steady hand, even if they won’t be welcoming the AUD upswing. Australia’s Q1 CPI (Wed) dominates the calendar this week. Westpac looks for 0.4% q/q, 1.9% y/y headline inflation, 0.6% q/q for the average of the RBA core measures, leaving these at 2.0% y/y, the bottom of the band. On Thu, it’s Q1 export and import prices.
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.”