NZD/AUD on a positive near-term footing, with 0.9600 targeted - Westpac

Imre Speizer, Research Analyst at Westpac, suggests that the sharp rise in dairy prices during the past three weeks has put the NZD/AUD cross back on a positive near-term footing, with 0.9600 targeted.

Key Quotes

“The Australian data calendar is very quiet, with nothing of note until Q2 construction work done (Wed). This is an important input to GDP but tends not to move AUD.

3 months: We target sub-0.92 multi-month because the cross is trading well above fair value implied by relative interest rates, commodities and risk sentiment and needs to correct this deviation eventually. In addition, if the RBNZ signals a deeper easing cycle than the RBA, interest rate differential changes will favour the AUD over the NZD.

1 year: Our economic fundamentals based forecast is 0.92.”