NZD/AUD to target 0.88 during the weeks ahead - Westpac

According to Imre Speizer, Research Analyst at Westpac, the NZD/AUD cross continues to decline, targeting 0.88 during the weeks ahead.

Key Quotes

“Major contributors recently have been NZ’s change of government, solid AU economic data (4.5 year low in unemployment), and a shrinking NZ-AU interest rate spread.”

“The event calendar highlight this week is dominated by Q3 CPI (Wed). Core inflation should be muted – our economists look for just 0.3% q/q – which would keep the RBA firmly on hold in November and prevent markets from more aggressive pricing for a 2018 hike.”

“3 months ahead: Fair value for the cross is around 0.88. We see that as a fair target for the remainder of 2017. Supportive of the AUD is positive Chinese economic data (although we expect that to change in 2018), while the RBNZ’s on-hold stance (arguably even more entrenched than the RBA’s) is chipping away at NZ’s yield advantage.”