20 Jul 2015
AUD/NZD could hit 1.16 in the medium term – Deutsche Bank
FXStreet (Edinburgh) - The FX Research team at Deutsche Bank sees the AUD/NZD grinding lower to the 1.16 handle in the medium term.
Key Quotes
“The outlook for the RBNZ has obviously changed over the course of this year with the kiwi central bank having eased once already”.
“DB expects a further 75 bps of easing this year (including 25bp at the coming OCR announcement on 23 July). In Australia we have the RBA on hold at 2.00%, with ongoing signs that conditions in the economy are ‘stabilizing’ (reflected, for example, in the lift in business conditions in last week’s NAB monthly business survey or the signs of improvement in the labour market over the course of this year)”.
“A -50bps ‘spread’ between front end rates in Australia and New Zealand (i.e. the RBA at 2.00% and the RBNZ at 2.50%) would be consistent with AUD/NZD trading around 1.16”.
“That is, both the current levels of milk and iron ore prices, as well as our forecasts for the RBA and RBNZ, suggest a (modest) further increase in AUD/NZD from current levels to 1.16”.
Key Quotes
“The outlook for the RBNZ has obviously changed over the course of this year with the kiwi central bank having eased once already”.
“DB expects a further 75 bps of easing this year (including 25bp at the coming OCR announcement on 23 July). In Australia we have the RBA on hold at 2.00%, with ongoing signs that conditions in the economy are ‘stabilizing’ (reflected, for example, in the lift in business conditions in last week’s NAB monthly business survey or the signs of improvement in the labour market over the course of this year)”.
“A -50bps ‘spread’ between front end rates in Australia and New Zealand (i.e. the RBA at 2.00% and the RBNZ at 2.50%) would be consistent with AUD/NZD trading around 1.16”.
“That is, both the current levels of milk and iron ore prices, as well as our forecasts for the RBA and RBNZ, suggest a (modest) further increase in AUD/NZD from current levels to 1.16”.