NZD/AUD: 0.93 area will give way for a multi-week move to the 0.90 area - Westpac

Imre Speizer, Research Analyst at Westpac, expects that the 0.93 area of the NZD/AUD cross will give way eventually, for a multi-week move to the 0.90 area.

Key Quotes

“Australia’s commodities have outperformed NZ’s, with coal the eye-catching mover recently but Australia’s broad terms of trade also on the rise. The low risk of further RBA easing is also help limit any AUD downside.

The belated release of Australia’s Sep labour force survey (Thu) is the data calendar highlight. We will also hear from the RBA: a speech by Governor Lowe and the Oct minutes, both on Tuesday.

3 months: We target 0.90 multi-month because the cross is trading well above fair value of 0.89 implied by relative interest rates, commodities and risk sentiment. 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.”