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The AUD/NZD downward correction since August has stalled and the pair could rise to 1.08 on Tuesday but analysts at Westpac expect a slump to the 1.06 neighborhood in the next weeks. By end-2020, they forecast the AUD/NZD pair pushing towards the 1.12 level.

Key quotes

“Over the next few weeks, the cross could slip further to the 1.06 area. Westpac recently changed its RBA forecast to a 15bp cut at the November meeting and markets are gravitating to that view. In addition, iron ore is under downward pressure as inventories need rebalancing.” 

“Further ahead, attention will shift to the RBNZ’s next dovish shift, which Westpac expects to be a cheap bank funding scheme (FLP) announced at the November meeting.” 

“Yields spreads should again favour the AUD, pushing the cross to 1.12 by year-end.”