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NZD southwards bound, declining iron ore prices to weigh on AUD - Nomura

FXStreet (Delhi) – Research Team at Nomura, believe that NZD will continue to depreciate, as milk prices are likely to continue to decline and the RBNZ is likely to cut rates soon.

Key Quotes

“On the AUD side, the resilience of the domestic economy, especially the labour market, has prompt the RBA to signal that further rate cuts are not imminent and should continue to provide some support for AUD. However, the continued decline in iron ore prices over the past few week, losing almost 20% since mid-October, points to a need for some adjustment lower in AUD given the impact on the terms of trade, the main driver of AUD.”

“We therefore close our long AUD/NZD position at the current level of 1.102 for a profit of US$405k. We still have a short NZD position via our long GBP basket.”

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