Outlook for the Antipodeans: ranges confined ahead of RBA / RBNZ - Westpac

Analysts at Westpac offered a market outlook for the Antipodeans. 

Key Quotes:

"AUD/USD 1 day:  Looks set to remain confined to a 0.7590-0.7710 range for an eighth consecutive day, albeit with upside risk.

AUD/USD 1-3 month: While further gains to around 0.77 are possible during the month ahead, driven in part by the faltering US dollar and yield-chasing flows, the AUD is losing energy (perhaps a reflection of its declining yield advantage). By year end, there’s a case for a correction towards 0.74 if the Fed tightens in December as we expect. (13 Sep)

NZD/USD 1 day: Looks set to remain confined to a 0.7220-0.7330 range for a seventh consecutive day.

NZD/USD 1-3 month:  Vulnerable to breaking below 0.7220 towards 0.6950 if the RBNZ cuts to 1.75% in November and the Fed tightens to 0.625% in December, as we expect. (3 Oct)

AUD/NZD 1 day: Stalled on Friday but remains poised to break above 1.0585.

AUD/NZD 1-3 month: A break above 1.0600 looms, the RBA likely to remain on hold this year while the RBNZ should ease further. Moreover, the cross remains well below fair value estimates implied by interest rates, commodity prices and risk sentiment. (3 Oct)

AU swap yields 1 day: The 2yr and 10yr should open slightly higher, led by global yield gains, to 1.69% and 2.14%

AU swap yields 1-3 month: If the RBA sits tight at 1.5% during the remainder of this year the 2yr should eventually find a base around 1.60%. However the main risk is that markets continue to price in a sub-1.5% cash rate. (15 Aug)

NZ swap yields 1 day: NZ 2yr swap rates should open 2bp higher at 2.02%, the 10yr up 3bp at 2.47%.

NZ swap yields 1-3 month: Slightly lower. The OCR is likely to be cut to 1.75% in November. That should result in a 2yr swap rate of around 1.90%, although the risk is it could be lower if markets expect a 1.5% terminal OCR. (15 Aug)."