AUD/NZD outlook and antipodean yields in a snapshot – Westpac

Analysts at Westpac offered an outlook for the Antipodean cross and relative yields.

Key Quotes:

"AUD/NZD 1 day: Looks in need of a correction before a resumption of the multi-week rise, down to 1.0640 would suffice.

AUD/NZD 1-3 month: Higher to 1.0750 or above, the RBA likely to remain on hold this year while the RBNZ should ease further. Moreover, the cross remains well below fair value estimates implied by interest rates, commodity prices and risk sentiment. (11 Oct)

AU swap yields 1 day: The 2yr and 10yr should open around 1.76% and 2.38%

AU swap yields 1-3 month: If the RBA sits tight at 1.5% during the remainder of this year the 2yr should eventually find a base around 1.60%. However the main risk is that markets continue to price in a sub-1.5% cash rate. (15 Aug)

NZ swap yields 1 day: NZ 2yr swap rates should open down 1bp at 2.07%, the 10yr down 2bp at 2.66%.

NZ swap yields 1-3 month: Slightly lower for the 2yr. The OCR is likely to be cut to 1.75% in November. That should result in a 2yr swap rate of around 1.90%, although the risk is it could be lower if markets expect a 1.5% terminal OCR. (15 Aug)."

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