NZD/AUD targets 0.98 next - Westpac

Imre Speizer, Senior Market Strategist at Westpac, notes that the AUD had two shocks last week: what looked like a hung Parliament on Monday and the S&P move to a negative outlook today.

Key Quotes

“The AUD held its own against most currencies, but the NZD was considered a better bet (and probably still is. The cross has support at 0.9600, and targets 0.98 next.

Australia’s data calendar has NAB business sentiment Tuesday, Westpac consumer sentiment on Wednesday and employment on Thursday. With domestic markets clearly impacted by Brexit and polls hung ahead of the election, we would expect to see some sort of sentiment/ confidence dip in the data.

3 months: We target 0.94 multi-month because the cross is trading well above fair value implied by relative interest rates, commodities and risk sentiment. The main risk to this view is from global shocks (for example from China or the Eurozone), which typically affect the AUD more than the NZD.

1 year: Our economic fundamentals based forecast is 0.93.”