Deutsche Bank on the Australian and New Zealand dollars, the analysts there remain bullish AUD vs. NZD.
- We've liked AUD/NZD upside continuously and continue to do so.
- Divergent external balances and growth paths, supportive positioning and valuation all suggest more upside.
- With dollar strength likely to continue, selling NZD/USD also looks attractive: a richly priced central bank, deteriorating external accounts and weak growth all bode poorly.
- Australia looks robust by comparison – a record employment ratio, robust business sentiment, retail sales ticking along.
The chart shows the persistent gains the AUD has seen against NZD. That last candle, an outside reversal, suggests a pause (at least) in the upmove is imminent though.
On the fundamental front
- the RBA meet next Tuesday (October 4, statement due 0330 GMT), a 50bp rate hike is widely expected
- the RBNZ meet next Wednesday (October 5, statement due at 0100 GMT), a 50bp rate is also widely expected