NZD/AUD could retest the 0.9625 peak - Westpac

NZD/AUD cross could retest the 0.9625 peak formed two weeks ago and for that we will need some much better economic data soon for the RBA’s 3+% growth forecasts to be met, suggests Imre Speizer, Research Analyst at Westpac.

Key Quotes

“May job creation would have to be very strong for markets to stop leaning towards (albeit only slightly) another rate cut. Iron ore prices are also proving softer and for longer than we had been expecting.”

“It’s another busy data week, with May employment the highlight (Thu 15th). Also on the slate are Apr home loans (Fri), May NAB business confidence (Tue) and Jun Westpac consumer sentiment (Wed).”

“3 months ahead: Fair value for the cross has risen to around 0.92, following this year’s sharp decline in iron ore prices. We see that as a fair target for the remainder of 2017.

Potentially supports for the AUD include the Chinese authorities’ eagerness to counter the negative headlines over Moody’s sovereign downgrade. In addition, the strength of steel reinforcing bar (rebar) prices suggests iron ore should eventually play catch-up.”