NZD/AUD: Multi-month decline remains intact - Westpac

The multi-month decline remains intact for NZD/AUD cross and the next major technical target being 0.8870 (the April 2016 low) during the weeks ahead, according to Imre Speizer, Research Analyst at Westpac.

Key Quotes

“Both interest rates and commodity prices have favoured AUD during the past month, and explain the fall in the NZD/AUD cross.”

“The event calendar this week is huge: Q2 GDP (Wed); its inputs on Mon (company profits, wages, inventories) and Tue (net exports, public demand); Jul retail sales and trade balance (Thu 7th), and always the market highlight - RBA on Tue. The latter will remain on hold but any tweaks to the statement will be closely analysed.”

“Q2 GDP is shaping up as a decent rebound from the weather-affected 0.3% in Q1. If it does print near our 0.7% estimate and the global mood remains largely optimistic, then NZ-AU interest rates spreads should decline further, pushing NZD/AUD lower.”

“3 months ahead: Fair value for the cross is around 0.89. We see that as a fair target for the remainder of 2017. Supportive of the AUD are the rebound in iron ore prices and positive Chinese economic data, as well as the RBNZ’s on-hold stance (arguably even more entrenched than the RBA’s).”