The Australian dollar and the New Zealand dollar have both rolled and rocked in recent weeks, and they could be moving in different direction.
The team at Deutsche Bank lists 4 reasons to buy the AUD/NZD cross with a clear target:
Here is their view, courtesy of eFXnews:
AUD/NZD offers a good buying opportunity targeting 1.15, plus low beta to uncertain Fed policy and Chinese growth prospects, advises Deutsche Bank. DB outlines 4 reasons behind this view.
1) Labour data. DB expects Australia’s Thursday’s labour market data to beat the market consensus, with job growth of 15k in July leaving the unemployment rate unchanged at 6.0%.
2) Rates re-pricing. While the RBA sounded less dovish at this week meeting, DB thinks market will start to re-price a 50bps of RBNZ easing at the next two meetings.
3) Commodity prices. Although iron ore remains under pressure, DB argues that it remains a two-way market.
4) Positioning. DB notes that while kiwi net shorts have been cut by 30% since early July, net shorts in AUD have increased by 130%, allowing for a meaningful squeeze.
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