FXStreet reports that economists at Westpac discusses AUD/NZD prospects.
“Forecast returns to New Zealand farmers have been revised higher after the recent surge in dairy prices at auction. Overall NZ’s terms of trade continues to trend firmly higher. But prices and volumes of Australia’s key commodity exports have been very robust through the pandemic. Indeed Australia has recorded trade surpluses for >3 years and is running current account surpluses in contrast to ongoing deficits in NZ. The relative monetary policy ‘vibe’ has favoured the kiwi since markets stopped pricing a negative cash rate in Nov 2020. OIS markets now price a sizeable risk of a rate hike this year. However, we expect such expectations to be disappointed, with the cash rate on hold through 2021 and also 2022. We look for AUD/NZD to find support in the mid-high 1.06s, with multi-week scope for another run at 1.10.”
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