11 Feb 2015
AUD/NZD poised to test fresh lows - RBS
FXStreet (Bali) - Greg Gibbs, FX Strategist at RBS, argues that AUD/NZD is likely to test fresh lows based on relative commodity price trends, relative growth momentum including the reacceleration of the New Zealand housing market, and renewed rate cutting cycle in Australia.
Key Quotes
"We have argued that AUD/NZD is likely to test fresh lows. This is based on relative commodity price trends, relative growth momentum including the reacceleration of the New Zealand housing market, and renewed rate cutting cycle in Australia. We continue to hold this view. However, the prospect of new macro-prudential measures in New Zealand could delay or limit the potential down-side in AUD/NZD."
"It may require a tactical retreat from a short AUD/NZD position at some point. As such we advise watching closely for news about RBNZ macroprudential measures; including on how rapidly these may be implemented, and how specific the measures might be. If they opt for greater monitoring, similar to that adopted by Australia, then the impact on New Zealand rates and currency may be limited."
"On the other hand, we also have to monitor the Australian regulatory response to its housing market. Media reports from industry people suggest that investors have reinvigorated their demand for Australian property in its major cities again in response to the rate cut last week. As such, it is possible that Australian regulators also respond to this development with tougher macroprudential measures."
Key Quotes
"We have argued that AUD/NZD is likely to test fresh lows. This is based on relative commodity price trends, relative growth momentum including the reacceleration of the New Zealand housing market, and renewed rate cutting cycle in Australia. We continue to hold this view. However, the prospect of new macro-prudential measures in New Zealand could delay or limit the potential down-side in AUD/NZD."
"It may require a tactical retreat from a short AUD/NZD position at some point. As such we advise watching closely for news about RBNZ macroprudential measures; including on how rapidly these may be implemented, and how specific the measures might be. If they opt for greater monitoring, similar to that adopted by Australia, then the impact on New Zealand rates and currency may be limited."
"On the other hand, we also have to monitor the Australian regulatory response to its housing market. Media reports from industry people suggest that investors have reinvigorated their demand for Australian property in its major cities again in response to the rate cut last week. As such, it is possible that Australian regulators also respond to this development with tougher macroprudential measures."