AUD/NZD: a retest of the 1.1200 on the cards longer term? - Westpac

Analysts at Westpac offered their outlook for AUD/NZD and antipodean rates.

Key Quotes:

"AUD/NZD 1 day: NZ election uncertainty appears to be fully priced, the cross now responding more to other factors such as iron ore’s decline. The 1.0830 area is a near term target.

AUD/NZD 1-3 month: A retest of the 1.1200 area seen in April is possible if iron ore’s rally since mid-June continues and global risk sentiment remains elevated. (4 Sep)

AU swap yields 1 day: The 3yr should open around 2.20%, the 10yr around 2.98%.

AU swap yields 1-3 month: Our RBA outlook (on hold for some time) is anchoring short-maturity interest rates and should keep 3yr swap rates in a 1.8% to 2.3% range, as long as core inflation remains below 2%. Longer maturity rates will largely follow US rates. (8 Aug).

NZ swap yields 1 day: NZ 2yr swap rates should open up 2bp at 2.22%, the 10yr up 4bp at 3.25%, in response to AU and US interest rates movement overnight. Then we have the RBNZ.

NZ swap yields 1-3 month: Our RBNZ outlook (on hold throughout 2018) is anchoring short-maturity interest rates and should keep 2yr swap rates in a 2.1% to 2.6% range, as long as inflation remains below 2%.  Longer maturity rates will largely follow US rates. (8 Aug)"