Antipodeans outlook: Aussie turning positive, Kiwi neutral - Westpac

Analysts at Westpac offered an outlook for the antipodeans.

Key Quotes:

"AUD/USD 1 day:  Momentum is starting to switch to positive, the immediate target 0.7690 (4 Oct high).

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: Looking neutral today between 0.7060 and 0.7160.

NZD/USD 1-3 month:  Targets 0.6950 or lower as long as the RBNZ cuts to 1.75% in November and the Fed tightens to 0.625% in December, as we expect. (13 Oct)

AUD/NZD 1 day: Thursday’s reversal downwards was trumped on Friday by an even bigger reversal upwards, leaving the cross in a positive state. That said, the 1.0770 area provided formidable resistance in July and August, and momentum indicators show it’s overbought here.

AUD/NZD 1-3 month: Higher to 1.0750 or above, the RBA likely to remain on hold this year while the RBNZ should ease further. Moreover, the cross remains well below fair value estimates implied by interest rates, commodity prices and risk sentiment. (11 Oct)

AU swap yields 1 day: The 2yr and 10yr should open around 1.78% and 2.35%

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 up 1bp at 2.07%, the 10yr up 3bp at 2.66%, with potential for an even steeper curve than this implies.

NZ swap yields 1-3 month: Slightly lower for the 2yr. 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)."