AUD/NZD: targeting 1.1265 next (April high)? - Westpac

Analysts at Westpac offered their outlook for the Antipodean cross.

Key Quotes:

"AUD/NZD 1 day: The sharp break higher yesterday, catalysed by the AU jobs data plus the NZ Government announcement, targets 1.1265 next (April high), although iron ore’s 3% fall yesterday may weigh.

AUD/NZD 1-3 month: September’s downward correction should give way to a resumption of the trend rise which started in June, and test 1.12, contingent on AU commodity prices recovering and risk sentiment remaining elevated. (4 Oct)

AU swap yields 1 day: The 3yr should open around 2.15%, the 10yr around 2.92%.

AU swap yields 1-3 month: Our RBA outlook (on hold throughout 2018) is anchoring short-maturity interest rates and should keep 3yr swap rates in a 1.80% to 2.30% range, as long as core inflation remains below 2%. Longer maturity rates will largely follow US rates. (4 Oct).

NZ swap yields 1 day: NZ 2yr swap rates should open down 3bp at 2.18%, the 10yr down 2bp at 3.18%, in response to AU and US interest rates movement overnight, plus the NZ Government announcement.

NZ swap yields 1-3 month: Our RBNZ outlook (on hold throughout 2018) is anchoring short-maturity interest rates and should keep 2yr swap rates in a 2.10% to 2.50% range, as long as inflation remains below 2%.  Longer maturity rates will largely follow US rates. (4 Oct)"