Westpac update the AUD, NZD outlook - eyeing RBNZ, Fed
WPAC have updated their NZD/USD and AUD/NZD thoughts
For the one to three month horizon
- By year end, we expect to see it below 0.6600 if the RBNZ cuts the OCR.
- In addition, we expect the US economy to improve in the second half of 2019, which should support the US dollar.
- Fundamentals (commodity prices and interest rates) argue the cross should be higher (fair value is 1.13), but global risks plus AU political risks have been AUD headwinds.
- That said, AU-NZ yields spreads should move higher over the next month given RBNZ easing risks, lifting the cross to 1.0700+.