AUD/NZD: watching iron ore for downside in the cross - Westpac

Analysts at Westpac offered their view on antipodean cress and rates.

Key Quotes:

AUD/NZD 1 day: Expect the 1.0830 area to be tested again if iron ore remains under downward pressure.

AUD/NZD 1-3 month: A retest of the 1.1200 area seen in April is possible if iron ore’s rally since mid-June continues and global risk sentiment remains elevated. 

AU swap yields 1 day: The 3yr should open around 2.19%, the 10yr around 3.00%.

AU swap yields 1-3 month: Our RBA outlook (on hold for some time) is anchoring short-maturity interest rates and should keep 3yr swap rates in a 1.8% to 2.3% range, as long as core inflation remains below 2%. Longer maturity rates will largely follow US rates. 

NZ swap yields 1 day: NZ 2yr swap rates should open up 1bp at 2.22%, the 10yr up 2bp at 3.28%, in response to AU and US interest rates movement overnight.

NZ swap yields 1-3 month: Our RBNZ outlook (on hold throughout 2018) is anchoring short-maturity interest rates and should keep 2yr swap rates in a 2.1% to 2.6% range, as long as inflation remains below 2%.  Longer maturity rates will largely follow US rates.