Antipodeans outlook: Aussie in wait-and-see mode ahead of key events - Westpac

Analysts at Westpac offered their outlooks for the antipodeans.

Key Quotes:

"AUD/USD 1 day:  The intraday toppish pattern formed last night argues for further slippage to around 0.7500 today. Otherwise it’s in wait and see mode ahead of the BoJ and FOMC on Wed/Thu.

AUD/USD 1-3 month: While further gains to around 0.77 are possible during the month ahead, driven in part by the faltering US dollar and yield-chasing flows, the AUD is losing energy (perhaps a reflection of its declining yield advantage). By year end, there’s a case for a correction towards 0.74 if the Fed tightens in December as we expect. (13 Sep)

NZD/USD 1 day: The intraday toppish pattern formed last night argues for further slippage to around 0.7275 ahead of the GDT auction. Otherwise it’s in wait and see mode ahead of the BoJ and FOMC and RBNZ on Wed/Thu.

NZD/USD 1-3 month:  During the month ahead another probe above 0.75 is possible, driven by good NZ economic news, a still-vulnerable US dollar, and yield-chasing inflows. By year end, there’s a case for a correction towards 0.70 if the Fed tightens in December as we expect. (13 Sep)

AUD/NZD 1 day: This multi-day rebound has a technical obstacle around 1.0345  (early Sep lows).

AUD/NZD 1-3 month: During the month ahead, we expect further losses into the 1.01-1.02 zone, partly driven by a declining AU/NZ commodity price ratio. By year-end, we expect a rebound towards 1.06, the cross well below fair value implied by interest rates, commodity prices and risk sentiment.  (8 Sep)

AU swap yields 1 day: The 2yr should open at 1.70% while the 10yr should open at 2.29%.

AU swap yields 1-3 month: If the RBA sits tight at 1.5% during the remainder of this year the 2yr should eventually find a base around 1.60%. However the main risk is that markets continue to price in a sub-1.5% cash rate. (15 Aug)

NZ swap yields 1 day: NZ 2yr swap rates should open unchanged at 2.09%, while the 10yr should open unchanged at 2.62%."

NZ swap yields 1-3 month: Slightly lower. The OCR is likely to be cut to 1.75% in November. That should result in a 2yr swap rate of around 1.90%, although the risk is it could be lower if markets expect a 1.5% terminal OCR. (15 Aug).