19 Feb 2015
AUD/NZD set to post new lows near-term, around 1.02 handle – Westpac
FXStreet (Barcelona) - Sean Callow of Westpac, views AUD/NZD might print new lows in the near-term preferably around the 1.02 handle, but recover to 1.05 levels gradually.
Key Quotes
“AUD/NZD remains very close to post-1985 lows, about 18 cents below the long term average price. The 1.00- 1.05 range accounts for just 0.3% of all trading days since the NZD float.”
“The pair could well print new postfloat lows near term, perhaps with a 1.02 handle.”
“RBA’s Feb rate cut is seen as unlikely to be a one-off while the RBNZ has cooled talk of a cut in the OCR. Iron ore prices remain heavy while dairy prices are rebounding.”
“But our fair value estimate has been reasonably stable, holding around 1.08. Hence we view AUD/NZD as in clear undershooting mode and expect a gradual recovery to 1.05 multi-week, given market pricing on the RBA is already aggressive (cash rate at 1.80% versus Westpac’s 2.00% view) and relative commodity prices pointing to NZD strength being excessive.”
Key Quotes
“AUD/NZD remains very close to post-1985 lows, about 18 cents below the long term average price. The 1.00- 1.05 range accounts for just 0.3% of all trading days since the NZD float.”
“The pair could well print new postfloat lows near term, perhaps with a 1.02 handle.”
“RBA’s Feb rate cut is seen as unlikely to be a one-off while the RBNZ has cooled talk of a cut in the OCR. Iron ore prices remain heavy while dairy prices are rebounding.”
“But our fair value estimate has been reasonably stable, holding around 1.08. Hence we view AUD/NZD as in clear undershooting mode and expect a gradual recovery to 1.05 multi-week, given market pricing on the RBA is already aggressive (cash rate at 1.80% versus Westpac’s 2.00% view) and relative commodity prices pointing to NZD strength being excessive.”