Forex Flash: AUD/NZD 1.2000, so what’s next? – TD Securities

FXstreet.com (London) - With AUD/NZD is consolidating above 1.2000 after its tremendous performance against its closest counterpart, The New Zealand dollar, Alvin Pontoh, FX strategist at TD Securities in Singapore say’s that they are leaning towards expecting a reversal of AUD/NZD weakness, rather than expecting another down leg to fresh lows.

He writes that the AUD looks attractive vis-à-vis the NZD at this point. And they target a move back to 1.24 within the next three months.They see three fundamental reasons for this; a) the swaps market has over-priced RBA rate cuts, b) both central banks are concerned about high exchange rates, but of the two, the RBNZ seems just that little bit more concerned, and finally, c) they see the RBA gradually toning down its easing bias albeit in small steps, within the next few meetings, and move to ‘neutral’ by early 2014.