NZD/AUD cross has run out of steam at 0.96 - Westpac

Imre Speizer, Research Analyst at Westpac, suggests that the NZD/AUD cross has run out of steam at 0.96, and should remain just below that area until some data catalysts later in the week.

Key Quotes

“The Australian data calendar is quiet until Tue when we see Jul building approvals. Then on Wed it’s Jul private credit but the key day is Thu when we see both Jul retail sales and private capital expenditure, both Q2 actual and investment plans for 2016/17.

3 months: We target sub-0.92 multi-month because the cross is trading well above fair value implied by relative interest rates, commodities and risk sentiment and needs to correct this deviation eventually. In addition, if the RBNZ signals a deeper easing cycle than the RBA, interest rate differential changes will favour the AUD over the NZD.

1 year: Our economic fundamentals based forecast is 0.92.”