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NZD/AUD targets 0.9750 next - Westpac Sandeep Kanihama

Imre Speizer, Senior Market Strategist at Westpac, suggests that the NZD/AUD cross has broken above a month-old sideways range and targets 0.9750 next, driven mainly by AUD weakness.Key Quotes“Australia’s data calendar will be dominated by the results of the Federal election over the weekend and the outcome of the RBA. The close result (50% party vote each) raises the possibility of a hung Parliament, with negative implications for the credit rating outlook. Regarding the RBA, given global developments we would expect to see some guidance suggesting some ‘scope’ for lower interest rates. Data releases include May trade balance and retail sales.3 months: We target 0.94 multi-month because the cross is trading well above fair value implied by relative interest rates, commodities and risk sentiment. The main risk to this view is from global shocks (for example from China or the Eurozone), which typically affect the AUD more than the NZD.1 year: Our economic fundamentals based forecast is 0.93.”



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