NZD/AUD: Looks poised to break below 0.9445 - Westpac

NZD/AUD cross has stalled during the past few days but looks poised to break below 0.9445, signalling a move to 0.9300.

Key Quotes

"The AUD has enjoyed support from commodity prices plus the RBA sounding comfortable about Australia’s outlook. An update from the latter on Tue should result in an on-hold decision, markets only assigning a 20% chance of a rate cut.

The main data releases will be Aug readings on building approvals (Tue), retail sales (Wed) and international trade (Thu).

3 months: We target below 0.94 multi-month because the cross is trading well above fair value implied by relative interest rates, commodities and risk sentiment and needs to correct this deviation eventually. In addition, the RBNZ has signalled further easing while the RBA has not signalled anything.

1 year: Our economic fundamentals based forecast is 0.93.”