NZD/AUD: Potential for another attempt at the 0.9800 level - Westpac

Imre Speizer, Research Analyst at Westpac, suggests that the NZD/AUD cross stalled last week around 0.9765 and is currently consolidating recent gains.

Key Quotes 

“As longs as the cross doesn’t fall below 0.9600, we see potential for another attempt at the 0.9800 level. NZ vs AU commodity outperformance is an explanation, one which could extend into this week. The Australian event calendar is quiet. The minutes from the RBA’s Sep meeting (Tue) should have little or no impact, while data releases are low key.

3 months: We target 0.94 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, the RBNZ has signalled further easing while the RBA has not signalled anything.

1 year: Our economic fundamentals based forecast is 0.94.”