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AUD crosses see mixed fortunes – ANZ

FXStreet (Barcelona) - Daniel Been at ANZ highlights their forecast for the AUD crosses.

Key Quotes

“For the AUD/NZD, global issues are likely to impact both AUD and NZD relatively equally, leaving this cross in a pattern of consolidation. The main game in town for the coming quarter is USD moves and the potential for shocks associated with the withdrawal of liquidity. China also remains a potential source of market risk, but both of these factors will have a relatively equal impact on AUD and NZD. We prefer owning this cross on dips given there is more scope for the below-trend Australian economy to accelerate.”

“In the near-term, risks to the AUD/JPY have become more balanced. Historically, the current level in the cross has prompted profit taking from a number of Japanese investors in the Australian market. Like in 2013, this can have a marked effect on the cross and at these levels, risks are to the downside.”

“The recent outperformance of the AUD/GBP should come to an end. While we continue to expect both currencies to underperform against the USD in the near-term, the recent AUD outperformance is not sustainable. Given the recent readjustment to market expectations around the timing of rate hikes from the BoE, downside risks are rebuilding in the cross.”

“AUD/EUR on the other hand will likely continue to edge higher in the near-term as continued disappointment in activity data, together with softening inflation expectations, will keep the prospect of further action from the ECB open. Ultimately, we do not think this will manifest and the EUR should rally.”

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