7 May 2015
AUD/NZD dips remain a buy – Westpac
FXStreet (Barcelona) - Sean Callow of Westpac, estimates AUD/NZD fair value around 1.0750-1.0800 , and suggests dips on the pair remain a buy opportunity.
Key Quotes
“The RBNZ views the NZD as “unjustifiably high and unsustainable in terms of New Zealand’s long-term economic fundamentals.” It has held a similar view for quite some time but obviously talking about the kiwi is nowhere near as powerful as raising the prospect of unwinding some of the 2014 tightening. This adds heft to the AUD/NZD recovery.”
“Our short term fair value estimate only dipped to about 1.05 even as spot was overshooting with its run towards parity. With yield spreads now moving back in AUD’s favour and recent trends in relative commodity prices also supportive, we now peg AUD/NZD fair value around 1.0750-1.0800.”
“Price action should become more two-way as markets ponder if/whether the RBNZ will actually ease and how long the RBA will be on hold. But any dips under 1.0500 should find eager buyers.”
Key Quotes
“The RBNZ views the NZD as “unjustifiably high and unsustainable in terms of New Zealand’s long-term economic fundamentals.” It has held a similar view for quite some time but obviously talking about the kiwi is nowhere near as powerful as raising the prospect of unwinding some of the 2014 tightening. This adds heft to the AUD/NZD recovery.”
“Our short term fair value estimate only dipped to about 1.05 even as spot was overshooting with its run towards parity. With yield spreads now moving back in AUD’s favour and recent trends in relative commodity prices also supportive, we now peg AUD/NZD fair value around 1.0750-1.0800.”
“Price action should become more two-way as markets ponder if/whether the RBNZ will actually ease and how long the RBA will be on hold. But any dips under 1.0500 should find eager buyers.”