Key Points:
1. AUD Outlook: JP Morgan believes that the AUD/USD remains undervalued compared to commodities, rate spreads, and equity performance, hinting at potential convergence towards a higher fair value. However, they caution that the AUD might be most vulnerable to tightening global credit conditions. JP Morgan predicts AUD/USD to reach 0.70 by 4Q 2023, and 0.69 by 2Q 2024.
2. NZD Outlook: The bank is bearish on the NZD, citing weakening activity and likely peaking rates. They believe rate cuts may arrive sooner than what is currently priced by markets. JP Morgan suggests that monetary policy and commodity prices could negatively affect NZD relative to AUD. They forecast NZD/USD to hit 0.62 by 4Q 2023 and 0.61 by 1Q 2024, recommending a short position on NZD/USD.
This is via the folks at eFX.
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