27 May 2013
Flash: New Zealand strategy profile – Westpac
FXstreet.com (Barcelona) - According to Global FX Strategist Sean Callow at Westpac, “The long-awaited NZD/USD unwind of extremely long speculative positioning appears to be underway – the breakdown heralds a further decline to 0.7800 during the weeks ahead.”
Finally, the NZ curve will find it difficult to steepen any further as QE-adjustment fears subside. Ultimately, “We favor a week-ahead range of 105bp-115bp for the 2-10yr.” Callow adds.
With regards to NZ swaps, there should be enough residual concern to push NZ rates slightly higher this week. 2yr swaps could reach 3.00% but that should be the extent of it given the RBNZ is on hold until next year. 10yr swaps should remain below 4.10%, off shore inflows into NZGB’s strong at present.
Finally, the NZ curve will find it difficult to steepen any further as QE-adjustment fears subside. Ultimately, “We favor a week-ahead range of 105bp-115bp for the 2-10yr.” Callow adds.
With regards to NZ swaps, there should be enough residual concern to push NZ rates slightly higher this week. 2yr swaps could reach 3.00% but that should be the extent of it given the RBNZ is on hold until next year. 10yr swaps should remain below 4.10%, off shore inflows into NZGB’s strong at present.