AUD/NZD: Bearish amid RBA-RBNZ monetary policy divergence – Morgan Stanley

Analysts at Morgan Stanley remain neutral on NZD/USD while maintaining a bearish view on AUD/NZD amid RBA-RBNZ monetary policy divergence.  

Key quotes

“We are neutral on NZD/USD still but risks are increasingly skewed to the downside as the chances of a broader-based USD rally are rising. “

“We continue to like AUD/NZD shorts as a structural expression of RBA-RBNZ policy divergence as the RBNZ's "Great Hawkish Shift" should continue over time.”

“We might consider re-entering NZD longs at a future date should the currency weaken enough which would render risk/reward sufficiently attractive, though we are not yet at that point especially if the positioning is likely to adjust further.”