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AUD/NZD: what's the outlook? - ANZ

Analysts at Westpac offered their outlook for the antipodean cross today ahead of the RBA's Monetary Statement.

Key Quotes:

AUD/NZD 1 day: Retains negative momentum, targeting 1.1000, as long as risk sentiment remains sour and NZ-AU interest rate spreads increase.

AUD/NZD 1-3 month: A resumption of the trend rise which started in June should test 1.13, contingent on AU economic data remaining supportive, commodity prices recovering, risk sentiment remaining elevated, and NZ politics weighing on the NZD. (25 Oct)

AU swap yields 1 day: The 3yr should open around 2.05%, the 10yr around 2.82%.

AU swap yields 1-3 month: Our RBA outlook (on hold throughout 2018) is anchoring short-maturity interest rates and should keep 3yr swap rates in a 1.80% to 2.30% range, as long as core inflation remains below 2%. Longer maturity rates will largely follow US rates. (4 Oct).

NZ swap yields 1 day: NZ 2yr swap rates should open down 1bp at 2.20%, the 10yr down 1bp at 3.18%, in response to AU and US interest rates movement overnight.

NZ swap yields 1-3 month: Our RBNZ outlook (on hold throughout 2018) is anchoring short-maturity interest rates and should keep 2yr swap rates in a 2.10% to 2.50% range, as long as inflation remains below 2%.  Longer maturity rates will largely follow US rates. (4 Oct)"

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