Analysts at Westpac suggest to go long on the AUD/NZD cross at 1.0655 levels, for the target price of 1.09.
Key Quotes
“The NZD has outperformed all G10 currencies over the past four months, and has fully priced a strong set of GDP, CPI, and jobs data, as well as a less dovish RBNZ. NZD/USD is now 2% above fair value.”
“In contrast, AUD/USD is 2% below fair value, arguably carrying too much weight from Australian political risks and the US-China trade war.”
“The RBA is bullish on growth and will also have taken heart from the uptick in wages growth in Q3. Meanwhile, the RBNZ is more cautious about the persistence of growth, and is willing to tolerate an inflation overshoot.”
“AUD/NZD short term fair value, based on yield spreads and relative commodity prices, is 1.12.”
Share
