16 Dec 2015
AUD/NZD: Should hold under 1.05 - Westpac
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.”
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.”