NZD/AUD cross could press on to the 0.9700 area - Westpac

The NZD/AUD cross made a five-month high at 0.9652 on Friday, and could press on to the 0.9700 area, according to Imre Speizer, Analyst at Westpac.

Key Quotes

“The main catalyst last week was the RBNZ’s less-dovish-than-feared statement, which boosted the NZ-AU interest rate spread.”

“Prices of Australia’s key commodities are showing signs of at least stabilising. Our daily commodity price index (WCFIAECI on Bloomberg) is about flat so far in June after a startling -13.8% in May. Oil prices are less helpful, though; if the declines are sustained they could affect LNG prices.”

“There are no local calendar items that could move AUD until early July.”

“3 months ahead: Fair value for the cross has risen to around 0.92, following this year’s sharp decline in iron ore prices. We see that as a fair target for the remainder of 2017.”

“Potential supports for the AUD include the Chinese authorities’ eagerness to counter the negative headlines over Moody’s sovereign downgrade. In addition, the strength of steel reinforcing bar (rebar) prices suggests iron ore should eventually play catch-up.”