29 Mar 2016
NZD/AUD: Likely test of key support at 0.8800 - Westpac
Imre Speizer, Senior Market Strategist at Westpac, suggests that the NZD/AUD cross is consolidating in a 0.8850-0.8950 range ahead of a likely test of key support at 0.8800.
Key Quotes
“The Australian calendar’s quiet period for data extends until Thu 31 Mar when we see Feb private sector credit, not a market mover anyway.
3 months: Our main argument for a lower cross (sub-0.89 multimonth) is the RBNZ is expected to ease again by June, whereas the RBA should remain on hold for some time. In addition, demand for AUD should get a boost from M&A activity. Risks to this view include the performance of the Chinese stockmarket and global commodities, which typically affect the AUD more than the NZD.
1 year: We expect the cross to trade at 0.87 or below in a year’s time, the interest rate spread expected to favour the AUD.”
Key Quotes
“The Australian calendar’s quiet period for data extends until Thu 31 Mar when we see Feb private sector credit, not a market mover anyway.
3 months: Our main argument for a lower cross (sub-0.89 multimonth) is the RBNZ is expected to ease again by June, whereas the RBA should remain on hold for some time. In addition, demand for AUD should get a boost from M&A activity. Risks to this view include the performance of the Chinese stockmarket and global commodities, which typically affect the AUD more than the NZD.
1 year: We expect the cross to trade at 0.87 or below in a year’s time, the interest rate spread expected to favour the AUD.”