NZD/AUD: Dovish RBNZ should push the cross below 0.9280 - Westpac

Imre Speizer, Research Analyst at Westpac, suggests that with the RBA out of the way, markets will now focus on the RBNZ which should give us a more dovish outlook than did the RBA.

Key Quotes

“That should push the cross below 0.9280 this week. Regarding AU events, RBA governor Stevens speaks at the annual Anika Foundation lunch on Wed, his final such speech. On the data front, we will see Jul NAB business confidence on Tue, Aug Westpac-MI consumer sentiment on Wed plus Jun housing finance approvals (Wed).

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 0.91.”