AUD/NZD: bulls building the bid - Westpac

Analysts at Westpac offered an outlook for the antipodean cross.

Key Quotes:

"AUD/NZD 1 day: Starting to rebuild positive momentum, targeting above 1.0560.

AUD/NZD 1-3 month: Higher to 1.0750 or above. The cross remains well below fair value estimates implied by interest rates, commodity prices and risk sentiment. (22 Nov)

AU swap yields 1 day: The 3yr and 10yr should open around 2.01% and 2.84%, respectively.

AU swap yields 1-3 month: The 3yr has probably based at 1.60%, the RBA expected to sit tight at a 1.5% cash rate for some time. (7 Nov)

NZ swap yields 1 day: NZ 2yr swap rates should open up 1bp at 2.27%, the 10yr up 2bp at 3.29%.

NZ swap yields 1-3 month: The RBNZ ended its easing cycle on 10 Nov and will now remain on hold for a long time. That will anchor the short end somewhat (although the 2yr-OCR spread – one measure of stretchedness – has been even higher than the current 50bp during past on-hold periods), with the long end free to follow offshore yields. The curve steepening trend should continue."