Market outlook for the antipodeans: risk-on, Aussie positive - Westpac

Analysts at Westpac offered the market outlook for the antipodeans.

Key Quotes:

"AUD/USD 1 day:  Risk sentiment supports the AUD for now, 0.7680 the next upside target. The AU jobs data today presents major event risk.

AUD/USD 1-3 month: The uncertainty generated by Brexit plus further RBA easing should be negative for the AUD during the months ahead. We target sub-0.72.

NZD/USD 1 day: Neutral today, stuck in a 0.7215-0.7325 range.

NZD/USD 1-3 month:  The uncertainty generated by Brexit plus further RBNZ easing should be negative for the NZD. We target 0.65.

AUD/NZD 1 day: Early signs momentum is basing, potential for a break above 1.0490 today. The jobs data is a major risk though.

AUD/NZD 1-3 month: We expect both the RBA and RBNZ to cut their policy rates in August, to 1.5% and 2.0% respectively.  Relative central bank paths are thus neutral for the cross. Multi-month, though, there is a case for higher, towards 1.0600, given it is currently well below fair value implied by interest rates, commodity prices and risk sentiment.

AU swap yields 1 day: The 2yr should open around 1.78% while the 10yr should open below 2.14%.

AU swap yields 1-3 month: If the RBA cuts to 1.5% as we expect, then the 2yr should eventually find a base around 1.7%.  

NZ swap yields 1 day: The 2yr should open 1bp lower at 2.22%, the 10yr down 1bp at 2.59%.

NZ swap yields 1-3 month: Slightly lower. The OCR should be cut to 2.0% low in August, which means the 2yr should reach 2.10% (a 2.0% OCR plus a 10bp bank bill premium)."