Australian interest rates are currently at 4.5% but two of the bigger banks are pricing in rate cuts of some 150+bps within the next 6 to 12 months. Both see rates at below 3% by mid-to-late 2012.
Interestingly, New Zealands rates aren’t expected to fall by anything like that amount, more like a 25bps cut over the next 12 months.
That should mean that AUD/NZD will struggle to trade much higher and at some stage will turn lower, as its usually very sensitive to the interest rate differential.
