NZD/AUD: Expect the cross to test the 0.9300 area - Westpac

Imre Speizer, Research Analyst at Westpac, suggests that after a long period underperfoming the NZD, roles have now been switched.

Key Quotes 

“Yes, the RBNZ will probably deliver a cut in August, to match the RBNZ’s, but the latter is likely to issue stronger dovish guidance given the persistent large inflation undershoots. We expect the cross to test the 0.9300 area.

Australia’s calendar quietens down this week, but there is the RBNZ minutes to watch on Tue.

3 months: We target 0.92 multi-month because the cross is trading well above fair value implied by relative interest rates, commodities and risk sentiment. The main risk to this view is from global shocks (for example from China or the Eurozone), which typically affect the AUD more than the NZD.

1 year: Our economic fundamentals based forecast is 0.93.”