A snippet from BNZ on what they expect for the AUD/NZD cross (although they refer to it the other way around).
- recent NZD/AUD strength has been driven by higher NZ-Australia rate spreads
- Our outlook is for NZ-Australian rate compression, with too-much tightening priced into the NZ rates curve and too-little for the Australian rates curve.
- The market has yet to embrace this view ... but ultimately a change in sentiment on the rates outlook is expected to trigger a reversal in NZD/AUD.
- Our projections have the cross settling into the low 0.90s, and we see levels above 0.95 as a good selling opportunity.
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AUD/NZD chart
ps. the 0.90 and 0.95 mentioned by BNZ for NZD/AUD would be 1.1111 and 1.0526 in this chart:
