AUD/NZD: buy the dips? – TDS

FX Strategists at TD Securities consider occasional dips in the cross as buying opportunities.

Key Quotes

“The recent Dec qtr GDP report was far weaker than we expected, with less than stellar growth in consumption and construction compounded by a significant drag from trade. In contrast, headline inflation looks set to breach 2% in Q1, and even if via food and fuel, our Q3 2018 hike has been brought forward by one quarter. If inflation expectations then race past 2%, we will bring it even further forward”.

“The RBNZ since mid-Feb has successfully talked down the currency via suggesting that the cash rate has asymmetric risks, remaining flat for up to two years. AUDNZD peaked at 1.10, but we see the current breather at 1.08 as an opportunity to look again at this cross as the RBA is more likely to lift the cash rate ahead of the RBNZ”.