By eFXdata — Dec 16 - 04:30 PM
Synopsis:
Credit Agricole recommends buying AUD/NZD on dips below 1.10, supported by relative rate dynamics, potential trade policy shifts, and resilient Australian fundamentals.
Key Points:
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Relative Rates:
- The RBA maintains a tighter policy stance compared to the RBNZ due to elevated Australian inflation.
- The RBNZ is focused on stimulating growth amid stable inflation expectations.
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China Tariffs Impact:
- AUD/NZD diverged from relative rates during Trump’s first term due to US-China tariffs.
- Credit Agricole expects lower-than-promised tariff levels amid potential trade negotiations, easing pressure on AUD.
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Trade Recommendation:
- Entry Level: Buy AUD/NZD on dips below 1.10, targeting 1.09 for optimal positioning.
- Risk Consideration: Expect volatility amid ongoing US-China trade talks.
Conclusion:
Credit Agricole sees value in AUD/NZD long positions on dips, driven by favorable relative rate dynamics and a potentially less aggressive US-China trade stance.
Source:
Crédit Agricole Research/Market Commentary