NZD/AUD likely to test 0.9300 - Westpac

Imre Speizer, Research Analyst at Westpac, notes that a break below 0.9450 for NZD/AUD last week has been sustained, such that we now look to 0.9300 being tested during the weeks ahead.

Key Quotes

“As the RBA noted last week, Australia’s terms of trade have improved, with the commodity price basket at highs since Dec 2014. A low risk of further RBA easing should also help limit any AUD downside.

Sentiment surveys are the main data focus for the week ahead. On Tue, it’s the NAB business confidence survey for Sep, Wed it’s Oct consumer sentiment from Westpac and MI.

3 months: We target below 0.94 multi-month because the cross is trading well above fair value implied by relative interest rates, commodities and risk sentiment and needs to correct this deviation eventually. In addition, the RBNZ has signalled further easing while the RBA has not signalled anything.

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