Westpac like AUD/NZD, say AUD is undervalued against the kiwi

Author: Eamonn Sheridan | Category: News

Westpac says a US China deal on trade would be bullish for the pair:

Supporting AUD are rRelative commodity prices
  • While dairy auction prices have risen lately, the surge in iron ore prices to 2 year highs is even more striking
  • Overall, we estimate that AUD/NZD is increasingly undervalued, suggesting a bias to buy dips rather than sell rallies multi-week
On the RBA:
  • aggressive pricing for RBA easing seems likely to constrain the cross
On trade (US/China tensions)
  • price action indicates AUD is preferred to NZD as the proxy for the state of US-China trade relations
  • This suggests that AUD/NZD will be wary as talks continue ahead of the 1 March deadline, but a deal of some description (which we expect) could see the pair commence a rally towards 1.08 multi-week

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