AUD/NZD: headed to 1.0650 before 1.1000 - Westpac

Analysts at Westpac offered their outlooks for the antipodean rates and cross.

Key Quotes:

"AUD/NZD 1 day: (1.0655) Favourable NZ data Strong NZ data and scope for a firmer RBNZ profile continue to trigger a flush below 1.0645-50 during the days ahead.

AUD/NZD 1-3 month: Higher to 1.10. The cross remains well below fair value estimates implied by interest rates, commodity prices and risk sentiment, although it is closing the gap (6 Mar).

AU swap yields 1 day: The 3yr should open at around 2.02%, the 10yr around 2.92%.

AU swap yields 1-3 month: Our RBA outlook (on hold for some time) is anchoring front end valuations. We expect 3yr swap rates to remain in a 2% to 2.3% range, with core inflation still below 2%. (26 Apr).

NZ swap yields 1 day: NZ 2yr swap rates should open unchanged at 2.36%, the 10yr at 3.46%.

NZ swap yields 1-3 month: The RBNZ said it has ended its easing cycle and will remain on hold for some time. That will anchor the short end, although markets will not abandon their expectations for tightening as early as 2018 which means occasional spikes in the 2yr will be likely. The long end will continue to follow mainly US yields, which we expect to rise. That means the curve steepening trend should continue. (7 May)."