NZDAUD: 0.9670 area tough to breach this week - Westpac

Imre Speizer, Research Analyst at Westpac, notes that the NZD/AUD cross was again repelled by the 0.9670 area last week and that area should be tough to breach this week, barring a surprise from the RBA.

Key Quotes

“The RBA meets on Tue and an on-hold decision is widely expected but we will be watching for any guidance. The Australian data calendar has Q2 inventories on Mon with company operating profits, and on Tue it’s balance of payments which includes net exports. Q2 GDP on Wed is the highlight of the data week.

3 months: We target sub-0.92 multi-month because the cross is trading well above fair value implied by relative interest rates, commodities and risk sentiment and needs to correct this deviation eventually. In addition, if the RBNZ signals a deeper easing cycle than the RBA, interest rate differential changes will favour the AUD over the NZD.

1 year: Our economic fundamentals based forecast is 0.92.”