AUD/NZD: a case for higher levels through 1.0750 - Westpac

Analysts offered a snap shot outlook for the AUD/NZD cross and rates.

Key Quotes:

"AUD/NZD 1 day: This corrective decline has so far retraced 62% of the Sep/Oct rally and is now ready to launch a fresh rally. We target 1.0600 during the day ahead.

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 1.79% and 2.49%, respectively.

AU swap yields 1-3 month: The 2yr base at 1.60% should hold during the next few months (barring an offshore-sourced shock), with the the RBA expected to sit tight at 1.5% for some time. (7 Nov)

NZ swap yields 1 day: NZ 2yr swap rates should open unchanged at 2.23%, the 10yr up 1bp at 2.93%.

NZ swap yields 1-3 month: Markets are now assuming the widely expected rate cut on 10 Nov will be the last in this cycle (barring an offshore-sourced shock). Thus, the 2yr will probably struggle to fall below 2.00%, with a range of 2.15%-2.35% more likely during the next few months. (7 Nov)."