NZD/AUD close to a turning point - Westpac

Imre Speizer, Senior Market Strategist at Westpac, suggests that the NZD/AUD momentum remains positive and could nudge the cross above 0.9400, but we are probably close to a turning point.

Key Quotes

“Relative interest rates and commodities argue NZD/AUD has risen too far and eventually needs to reverse.

The data calendar is empty until the first of the inputs to Q1 GDP, construction work done (Wed). More market-sensitive is Q1 CAPEX and investment intentions (Thu), though not likely to be pivotal for the RBA’s policy stance near term.

3 months: We target 0.90 multi-month because the cross is trading well above fair value implied by relative interest rates, commodities and risk sentiment. A major risk to this view would be a global shock (for example from China), those typically affecting the AUD more than the NZD.

1 year: Imre Speizer, Senior Market Strategist at Westpac, suggests that the NZD/AUD momentum remains positiveOur economic fundamentals based forecast is 0.89.”