AUD/NZD: Relatively low and good value - AmpGFX

The RBA succeeded in knocking the AUD down a bit, perhaps providing a buying opportunity and it may also be worth considering buying AUD/NZD, suggests the research team at Amplifying Global FX Capital. 

Key Quotes

“However, arguably the RBNZ has also been avoiding a necessity to lay the groundwork for a rate hike.  Nevertheless, AUD/NZD appears relatively low and good value.”

“Perhaps AUD/CAD is starting to look like a buy.  CAD has surged as the Bank of Canada has suggested it is preparing to reverse its rate cuts delivered in 2015 to address an oil price shock.  But you may think it better to wait at least until the first hike is delivered, probably on 12 July.”

“The latest QV NZ house price data showed inflation down sharply from 9.7%y/y in May to 8.1%y/y in June; down from 13.5%y/y in Feb, to a low since March-2015.  It appears that a significant toughening in macroprudential measures in NZ are having an effect.  The prospect of even more, if required, as the RBNZ has started work on adding debt-to-income limits to its tool set, may also be dampening activity.”

“Iron ore and steel prices in China have strengthened recently, whereas dairy prices have eased somewhat.”

“CFTC market positioning data also suggests that the market has extended NZD long positions.”