Updates to AUD and NZD outlooks (Westpac)
Doing a catch up on Westpac updating their outlooks for the two currencies over one to three month horizons:
FOMC's dovish turn helped drive AUD to near 0.7300
RBA's subsequent switch to neutral produced multi-week lows around 0.7050
Australia's key export prices have bounced
- notably 2 year highs for iron ore
With pricing for RBA easing aggressive and the wary Fed outlook supporting global risk appetite, AUD/USD should continue to find support on dips towards 0.70, capped at 0.73 and ending Q1 around 0.71.
We assume some version of a deal from US-China trade talks.
Key to the month-ahead outlook will be the RBNZ MPS
A dovish shift in stance, along the lines of that seen in the US and Australia, would renew downward pressure on NZD/USD and target 0.6600.
Beyond the next month, if the Fed signals it will hike again this year then the USD should appreciate and NZD/USD will decline further.