AUD/NZD: Risks to test 1.04 support - Westpac

According to Sean Callow, Research Analyst at Westpac, with AUD/NZD momentum suggesting risks towards 1.06 and having broken this level, the pair still seems unlikely to reverse course near term, with risks to 1.04 support.

Key Quotes

“The theme of recent weeks has been US-driven trade tensions, which may be why the prices of Australia’s industrial commodities have fallen relative to New Zealand’s, adding weight to the pair. It also appears that the more liquid AUD is preferred to NZD as a proxy for the risks to Asia-Pacific trade volumes.”

“But multi-week/month, our base case remains for the cross to recover to at least our short term fair value estimate which is now down to 1.09.”

“Interest rates are firmly on hold at both the RBA and RBNZ and while relative commodity prices have moved against AUD lately, it has not been substantial enough to warrant 8 month lows on AUD/NZD.”