2 May 2016
NZD/AUD: RBA to be the main influence on near term direction - Westpac
Imre Speizer, Senior Market Strategist at Westpac, suggests that it’s a big week for NZD/AUD cross, with the RBA likely to be the main influence on near term direction.
Key Quotes
“The RBA statement (Tue) is seen as 50% likely to deliver a rate cut. Either way, a sharp response from the AUD is assured. Our forecast is for an on-hold decision, which would push NZD/AUD lower, but until then it should remain in an elevated 0.92-0.93 range.
The busy AU calendar also includes Apr house prices, AiG Apr manufacturing PMI, Apr MI inflation gauge and the Apr NAB business survey on Mon. On Tue morning, Mar building approvals will be overlooked ahead of the RBA, and then at 7:30pm, we will see the annual federal budget. On Thu there’s Mar trade balance and Mar (and Q1 real) retail sales.
3 months: Our main argument for a lower cross (sub-0.88 multi-month) is that the RBNZ is expected to ease again by June, whereas the RBA should remain on hold. Risks to this view include the performance of the Chinese economy and global commodities, which typically affect the AUD more than the NZD.
1 year: We expect the cross to trade at 0.86 or below in a year’s time, the interest rate spread expected to favour the AUD.”
Key Quotes
“The RBA statement (Tue) is seen as 50% likely to deliver a rate cut. Either way, a sharp response from the AUD is assured. Our forecast is for an on-hold decision, which would push NZD/AUD lower, but until then it should remain in an elevated 0.92-0.93 range.
The busy AU calendar also includes Apr house prices, AiG Apr manufacturing PMI, Apr MI inflation gauge and the Apr NAB business survey on Mon. On Tue morning, Mar building approvals will be overlooked ahead of the RBA, and then at 7:30pm, we will see the annual federal budget. On Thu there’s Mar trade balance and Mar (and Q1 real) retail sales.
3 months: Our main argument for a lower cross (sub-0.88 multi-month) is that the RBNZ is expected to ease again by June, whereas the RBA should remain on hold. Risks to this view include the performance of the Chinese economy and global commodities, which typically affect the AUD more than the NZD.
1 year: We expect the cross to trade at 0.86 or below in a year’s time, the interest rate spread expected to favour the AUD.”