In view of Imre Speizer, Research Analyst at Westpac, last week’s corrective rebound for NZD/AUD cross is at risk of extending much further if 0.9300 gives way.

Key Quotes

“Risk-averse events globally have weighed on the AUD more than the NZD; iron ore has fallen further while dairy prices have been stable; and positioning remains long AUD (CFTC data shows that speculative AUD/ USD futures positioning was the highest since April 2016).”

“Australian data has been mixed for the AUD, with an encouragingly large trade surplus but poor retail sales and a more downbeat RBA statement. The buoyant housing market means rate cut talk struggles for traction. However, market hawks talking about a Q4 hike have little to work with and OIS pricing is now below 1.50% through year-end.”

“This week’s Australian data calendar highlight is March employment (Thu). Also worth noting are Feb housing finance approvals (Mon), Mar NAB business confidence (Tue), and Apr Westpac-MI consumer sentiment (Wed).”

“3 months ahead: We target the 0.9000 area multi-month, slightly above estimated fair value according to our model which captures interest rates, commodities, and risk sentiment. The cross is now only 4% overvalued, compared to 9% late last year.”