Outlook for antipodeans and general economic risks - Westpac
Economic Event Risks Today and outlooks for the antipodeans.
Key Quotes:
"There’s little data of note for markets today. Australia has an inflation indicator (MI) and services PMI, while China has the Caixin services PMI. Tonight there’s Eurozone investor sentiment (Sentix).
Market Outlooks
AUD/USD 1 day: Remains stuck in a 0.7500-0.7600 range.
AUD/USD 1-3 month: The RBA’s easing bias combined with the Fed’s tightening bias should push the AUD lower towards 0.74 by year end, although recent BOE and BOJ easing have made the AUD even more attractive to global investment flows such that a test of 0.78 is possible first. (1 Aug)
NZD/USD 1 day: Continues to test the 0.7300-0.7350 resistance area.
NZD/USD 1-3 month: The RBNZ’s easing cycle combined with the Fed tightening in December should push the NZD lower towards 0.70 by year end, although recent BOE and BOJ easing have made the NZD even more attractive to global investment flows such that a rise to the 0.75 area is possible first. (1 Aug)
AUD/NZD 1 day: The downside around 1.0340-50 remains vulnerable.
AUD/NZD 1-3 month: The RBNZ is likely to cut again in November, and should maintain a more dovish outlook than the RBA. In addition, the cross is well below fair value implied by interest rates, commodity prices and risk sentiment. We target 1.08. (15 Aug)
AU swap yields 1 day: The 2yr should open at 1.62% while the 10yr should open at 2.09%.
AU swap yields 1-3 month: If the RBA sits tight at 1.5% during the remainder of this year the 2yr should eventually find a base around 1.60%. However the main risk is that markets continue to price in a sub-1.5% cash rate. (15 Aug)
NZ swap yields 1 day: NZ 2yr swap rates should open up 1bp at 2.01%, while the 10yr should open up 1bp at 2.42%.
NZ swap yields 1-3 month: Slightly lower. The OCR is likely to be cut to 1.75% in November. That should result in a 2yr swap rate of around 1.90%, although the risk is it could be lower if markets expect a 1.5% terminal OCR. (15 Aug)."