NZD/AUD rebound continues to target 0.9245 - Westpac

The NZD/AUD cross’s corrective rebound continues to target 0.9245, but further gains should be laboured, since fair value models argue for the cross being 3% lower, suggests Imre Speizer, Research Analyst at Westpac.

Key Quotes

“AU commodities have outperformed NZ commodities (Chart 7). Key events for the AUD in Jan include Dec jobs data (18 Jan), and Q4 CPI on (31 Jan).”

“3 months ahead: We target 0.89 during the next few months. Australia’s key commodities could outperform NZ’s (particularly if iron ore prices rise in sympathy with steel prices at multi-year highs).

AUD should also benefit from stability in short end rates, as markets ignore the notion of a rate cut and remain focused on the timing of the rate rise that the RBA says is most likely the next move.”