AUD/NZD bullish bias - Westpac

Analysts at Westpac noted for AUD/NZD a one day range between 1.0450 and 1.0650.

Key Quotes:

"AUD/NZD 1-3 month: Higher to 1.0750 or above, the RBA likely to remain on hold this year while the RBNZ should ease further. Moreover, the cross remains well below fair value estimates implied by interest rates, commodity prices and risk sentiment. 

AU swap yields 1 day: The 2yr and 10yr should open around 1.86% and 2.76%, respectively.

AU swap yields 1-3 month: The 2yr base at 1.60% should hold during the next few months (barring an offshore-sourced shock), with the RBA expected to sit tight at 1.5% for some time. 

NZ swap yields 1 day: NZ 2yr swap rates should open up 2bp at 2.24%, the 10yr up3bp at 3.21%.

NZ swap yields 1-3 month: The RBNZ ended its easing cycle on 10 Nov and will now remain on hold for a long time. That will anchor the short end somewhat (although the 2yr-OCR spread – one measure of stretchedness – has been even higher than the current 50bp during past on-hold periods), with the long end free to follow offshore yields. The curve steepening trend should continue."