The Goldman Sachs strategists recommend going long on the AUD when compared with the kiwi, in light of the economic recovery prospects following the coronavirus pandemic led slowdown.
Key quotes
Go long AUD/NZD with a target of 1.1200 and stoploss 1.0300.
Australia has stronger external balance, better job market protections, lower exposure to tourism, substantial fiscal stimulus and better prospects to benefit from demand stimulus in China.
Australia should have a stronger position for recovery in economic growth.
Rate differentials are in Australia’s favor, RBA says it has no appetite for negative rates.
Forecasts for the cross:
3 months 1.12 vs. 1.00 previous
6 months 1.13 vs. 1.02 prior
12 months 1.15 vs. 1.04 previous.”
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