Bank updates to AUD and NZD views against the backdrop of a favoured USD

Some updates from Westpac on their AUD/USD and NZD/USD views.

WPAC have been calling the AUD lower for months against the background of a stronger USD. Spot on.

Latest:

AUD/USD 1-3 month:

• Australia's strong trade surpluses reinforce the positive story from the commodity price up trend since July, lifting some of the US-China trade war risk premium. Upbeat RBA outlook also helps; scope for a test of 0.7350-0.7400 near term. But relentless grind in yield spreads favouring USD should cap; back to 0.72 by year-end.

NZD/USD 1-3 month:

• The recent run of economic data has been strong, and speculators are extremely short NZD. That should propel NZD/USD higher near term, to 0.6850. Multi-month, though, our expectation that the US dollar will continue to strengthen, as the Fed hikes four more times over the next year, should see NZD/USD retesting 0.6425. (7 Nov)