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AUD/NZD: Should hold under 1.05 - Westpac

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Dec 16, 2015.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

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    FXStreet (Delhi) – Sean Callow, Research Analyst at Westpac, notes that ongoing weakness in industrial commodities and investor reluctance to price in further RBNZ easing have weighed on AUD/NZD in recent weeks.

    Key Quotes

    “In coming weeks early Nov lows under 1.05 should hold but perhaps with little room to spare. AUD/NZD fair value estimates are above 1.13, backed by greater confidence that the RBA won’t cut the cash rate again this cycle.

    But markets take a similar view on the RBNZ and the uptick in dairy prices suggest AUD/NZD remains below fair value into Q1 2016.

    We continue to look for a recovery to >1.10 but this probably won’t happen until markets move closer to our view that the RBNZ OCR will be cut to 2% in 2016 or we see signs of stabilization in iron ore and coal prices.”
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