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3 May 2013
Forex Flash: Stay short AUD/NZD – UBS
FXstreet.com (Barcelona) - The AUD/NZD finished the day down 20 pips at 1.2060 (lowest close since Oct 2009). The pair has been in a steep downtrend for the last six weeks, and some analysts see no reason to expect anything different going forward.
“We went short AUDNZD as a trade recommendation on Jan 31st in the expectation that monetary policy settings in Australia and New Zealand would start to converge later this year. The adjustment could happen in either direction - our economists think a more hawkish RBNZ is more probable than a more dovish RBA, although either outcome would suit our purposes. Incoming evidence reinforces our view Another piece of evidence arrived overnight in support of this trade -commodity prices of direct relevance to New Zealand's exports registered their largest monthly increase on record (+10.2% m/m measured in NZ$). Meanwhile, the price of Australia's commodity basket remains subdued.”
Furthermore they added,” Looking beyond commodities, booming NZ house prices have already triggered hawkish rhetoric, culminating in a shift towards a slight tightening bias at last week's RBNZ policy meeting. A watchful eye is also being kept on the accelerating post-earthquake reconstruction effort, given its potential to boost inflationary pressures more generally. Meanwhile, the RBA clings to an explicit easing bias and seems in no hurry to drop it”
“We went short AUDNZD as a trade recommendation on Jan 31st in the expectation that monetary policy settings in Australia and New Zealand would start to converge later this year. The adjustment could happen in either direction - our economists think a more hawkish RBNZ is more probable than a more dovish RBA, although either outcome would suit our purposes. Incoming evidence reinforces our view Another piece of evidence arrived overnight in support of this trade -commodity prices of direct relevance to New Zealand's exports registered their largest monthly increase on record (+10.2% m/m measured in NZ$). Meanwhile, the price of Australia's commodity basket remains subdued.”
Furthermore they added,” Looking beyond commodities, booming NZ house prices have already triggered hawkish rhetoric, culminating in a shift towards a slight tightening bias at last week's RBNZ policy meeting. A watchful eye is also being kept on the accelerating post-earthquake reconstruction effort, given its potential to boost inflationary pressures more generally. Meanwhile, the RBA clings to an explicit easing bias and seems in no hurry to drop it”