NZD/AUD: Potential for a decline to the 0.93 area - Westpac

The NZD/AUD cross appears to be carving out a topping pattern (“head and shoulders”) with potential for a decline to the 0.93 area, according to Imre Speizer, Research Analyst at Westpac.

Key Quotes

“Key fundamental drivers - commodities and interest rates - are showing early signs of being AUD-supportive, but neutral for now.”

“The data calendar is minor for markets. The Jun NAB business survey is out Tue, as is May home loans, and Jul Westpac-MI consumer sentiment Wed.”

“3 months ahead: Fair value for the cross has risen to around 0.92, following this year’s sharp decline in iron ore prices. We see that as a fair target for the remainder of 2017.

Potential supports for the AUD include the Chinese authorities’ eagerness to counter the negative headlines over Moody’s sovereign downgrade. In addition, the strength of steel reinforcing bar (rebar) prices suggests iron ore should eventually play catch-up.”