AUD/NZD: 1.09 on the cards longer-term? - Westpac

Analysts at Westpac noted that AUD/NZD stalled at 1.0800, capped by risk aversion (North Korea) before the RBNZ less dovish statement sent the cross lower. The analysts offer their forward outlook for the cross and antipodean rates.

Key Quotes:

"AUD/NZD 1-3 month: A retest of the 1.0900 area seen in May is possible if iron ore’s rally since mid-June continues and global risk sentiment remains elevated. 

AU swap yields 1-3 month: Our RBA outlook (on hold for some time) is anchoring short-maturity interest rates and should keep 3yr swap rates in a 1.8% to 2.3% range, as long as core inflation remains below 2%. Longer maturity rates will largely follow US rates. 

NZ swap yields 1-3 month: Our RBNZ outlook (on hold throughout 2018) is anchoring is anchoring short-maturity interest rates and should keep 2yr swap rates in a 2.1% to 2.6% range, as long as inflation remains below 2%.  Longer maturity rates will largely follow US rates."