AUD/NZD outlook: break towards 1.0875 on the cards? - Westpac

Analysts at Westpac offered their outlook for the antipodean cross and rates.

Key Quotes:

"AUD/NZD 1 day: Finally sustained the break above the very important 1.0765 area, and now targets 1.0875 (Feb 2016 minor peaks) during the week ahead.

AUD/NZD 1-3 month: Above 1.0770 towards 1.10. The cross remains well below fair value estimates implied by interest rates, commodity prices and risk sentiment, although is closing the gap (6 Mar).

AU swap yields 1 day: The 3yr and 10yr should open around 2.14% and 3.12%, respectively.

AU swap yields 1-3 month: The 3yr has probably based at 1.60%, the RBA expected to sit tight at a 1.5% cash rate for some time. (7 Nov)

NZ swap yields 1 day: NZ 2yr swap rates should open up 1bp at 2.35%, the 10yr unchanged at 3.54%.

NZ swap yields 1-3 month: The RBNZ said it has ended its easing cycle and will remain on hold until 2020. That will anchor the short end, although markets will not abandon their expectations for earlier tightening which means occasional spikes in the 2yr will be likely. The long end will continue to follow mainly US yields, which we expect to rise. That means the curve steepening trend should continue."