Antipodeans outlook: further gains expected - Westpac
Analysts at Westpac offered the market outlooks for the antipodeans.
Key Quotes:
"AUD/USD 1 day: The 0.7730-50 area is proving sticky. The overnight correction could extend lower to 0.7600 today.
AUD/USD 1-3 month: During the month ahead we expect further gains to around 0.78, driven in part by the faltering US dollar and yield-chasing flows. By year end, there’s a case for a correction towards 0.74 if the Fed tightens in December as we expect. (8 Sep)
NZD/USD 1 day: The correction overnight could easily extend down to the 0.7350 area which was sticky on the way up.
NZD/USD 1-3 month: During the month ahead we expect further gains into the 0.75-0.78 zone (the latter level marking a peak in April 2015). The US dollar looks vulnerable, yield-chasing flows remain strong, and NZ commodity prices are rising. By year end, there’s a case for a correction towards 0.70 if the Fed tightens in December as we expect. (8 Sep)
AUD/NZD 1 day: The multi-month downtrend has stalled around 1.0270 but momentum remains negative.
AUD/NZD 1-3 month: During the month ahead, we expect further losses into the 1.01-1.02 zone, partly driven by a declining AU/NZ commodity price ratio. By year-end, we expect a rebound towards 1.06, the cross well below fair value implied by interest rates, commodity prices and risk sentiment. (8 Sep)
AU swap yields 1 day: The 2yr should open at 1.66% while the 10yr should open at 2.14%.
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 3bp at 2.03%, while the 10yr should open up 4bp at 2.46%.
NZ swap yields 1-3 month: Slightly lower. 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)."