14 Jul 2015
AUD/NZD: Go long for target of 1.1463 - ANZ
FXStreet (Bali) - Sam Tuck and Richard Yetsenga, FX Strategists at ANZ Research see recent events firming up support for AUD/NZD, with upcoming events looking stacked in AUD’s favour, thus the bank's strategists recommend a tactical AUD/NZD long at 1.1110, stopping below support at 1.0987, targeting the 38.2% retrace of the 2011-2015 range at 1.1463, where they will reassess.
Key Quotes
"Today’s NAB Business Confidence survey adds to our estimations that this phase of the consolidation may be drawing to a close. Against this, NZ confidence has been declining of late, with ANZ Business Confidence dropping into negative territory for the first time since the second Christchurch earthquake in February 2011."
"ANZ expects New Zealand Q2 CPI on 16 July to underscore our call for the OCR to return to 2.5%. ANZ’s forecast of 0.3% q/q presents downside risks to the market consensus of 0.5% q/q. Contrast this with expectations for Australia’s Q2 CPI on 22 July, where we expect 0.9% q/q and 1.8% y/y inflation, with the ‘core read’ – the average of the trimmed mean and weighted median – to remain at 2.2% y/y, within the RBA 2-3% target."
"The next eight GlobalDairyTrade auctions (the next is Wednesday 15 July) could be particularly difficult, with higher seasonal volumes to shift, and anecdotal reports that many buyers’ immediate requirements are covered. We expect this to result in dairy prices staying at their cycle lows for now. Contrast this with iron ore, which recently plunged to a new cycle low, but subsequently recovered to the USD50/mt mark."
"ANZ expects the RBNZ to cut rates twice: first at the July OCR meeting on Thursday 23 July, and then a second time at the 10 September meeting. In contrast to the RBNZ, we expect the RBA to remain on hold over this period."
Key Quotes
"Today’s NAB Business Confidence survey adds to our estimations that this phase of the consolidation may be drawing to a close. Against this, NZ confidence has been declining of late, with ANZ Business Confidence dropping into negative territory for the first time since the second Christchurch earthquake in February 2011."
"ANZ expects New Zealand Q2 CPI on 16 July to underscore our call for the OCR to return to 2.5%. ANZ’s forecast of 0.3% q/q presents downside risks to the market consensus of 0.5% q/q. Contrast this with expectations for Australia’s Q2 CPI on 22 July, where we expect 0.9% q/q and 1.8% y/y inflation, with the ‘core read’ – the average of the trimmed mean and weighted median – to remain at 2.2% y/y, within the RBA 2-3% target."
"The next eight GlobalDairyTrade auctions (the next is Wednesday 15 July) could be particularly difficult, with higher seasonal volumes to shift, and anecdotal reports that many buyers’ immediate requirements are covered. We expect this to result in dairy prices staying at their cycle lows for now. Contrast this with iron ore, which recently plunged to a new cycle low, but subsequently recovered to the USD50/mt mark."
"ANZ expects the RBNZ to cut rates twice: first at the July OCR meeting on Thursday 23 July, and then a second time at the 10 September meeting. In contrast to the RBNZ, we expect the RBA to remain on hold over this period."