Commodities: watching AUD/NZD - Westpac

Analysts at Westpac offered a breakdown of commodities in respect to the anitpodeans.

Key Quotes:

"Relative commodity prices (expressed as a ratio of the NZ exportweighted basket to the Australian equivalent) have had a close relationship with the cross. 

During the past month this ratio has fallen sharply, reflecting the surge in coal, and to a lesser extent, iron ore prices.

Coking coal has risen around 130% since early September, and thermal coal has jumped 60% since early October.

NZ dairy prices have also risen but not as spectacularly - whole milk powder has risen 24% since early October.

Given the cross’s close relationship with commodity prices, it is curious NZ’s underperformance has not been priced in. Perhaps markets are skeptical about the sustainability of coal’s spectacular rise."