NZD/AUD: Break below 0.9280 would herald a 4c fall - Westpac

Imre Speizer, Research Analyst at Westpac, suggests that NZD/AUD pair after peaking at 0.9645 for an hour after the Trump win last week, the cross has steadily fallen since and a break below 0.9280 would herald a 4c fall during the months ahead.

Key Quotes

“AUD enjoys support from sharply higher AU commodity prices, relative to NZ’s. Doubts remain over sustainability yet the gloomy baseline predictions for coal and iron ore for end-2016 can now be pushed into 2017. So long as the wages & jobs data doesn’t stir RBA rate cut talk, the commodity rally should continue to depress NZD/AUD.

Australia’s calendar offers plenty for markets. Tue it’s the RBA Nov minutes but more important is the data. Wed we see Q3 wages, currently at a series low 2.1% y/y. Oct employment data on Thu is key, with the RBA sure to watch closely.

3 months: The NZD/AUD cross has failed to break below the 0.93 barrier during the past six months, despite repeated attempts. As a result, it is now extremely overvalued according to both our short and long term valuation models. We expect it to break lower eventually.”