Morgan Stanley like AUD/NZD, citing better data from Australia against that from New Zealand.

Recent data from Australia have improved, led by labour market and consumer confidence.

  • RBA has taken a cautious stance in trying to avoid QE, suggesting it will lower rates only reluctantly from here.
  • The housing market has shown tentative signs of stabilisation.

In contrast, New Zealand's data have remained weak

  • RBNZ's Orr seems willing to cut rates decisively lower, and is considering QE as an option.
  • NZ's data have remained weak.

Interest rate and yield differentials have come in

  • In the absence of higher rate differentials the NZD may come under selling pressure.

MS recommend:

  • Stop loss 1.0280
  • Target 1.11

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ps. Trade idea issued Monday, but with the cross little changed still relevant.