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Jul 11 - 02:55 PM

AUD/NZD: AUD-NZD Rates Differential Likely To Switch; Staying Long For 1.15 - SocGen

By eFXdata  —  Jul 11 - 01:30 PM

Societe Generale Research maintains a bullish bias on AUD/NZD, expressing this view via a long exposure in spot targeting a move towards 1.15 with a stop at 1.08.

"AUD/NZD has been following a regular bullish trend since the end of last year. The cross has been closely following the 5y swap rates differential, which has been constantly narrowing. In December, the NZD 5y rate was about 1% wider than the AUD 5y rate, and even though both rates have increased, the RBA is providing a steeper path," SocGen notes. 

"The rates spread is vanishing, and this has propelled the AUD/NZD above 1.10 for the first time since 2018. As the RBNZ started to hike earlier than the RBA, the latter is now proving more aggressive in the catch-up, so that the rates differential is likely to switch soon in the favour of Australian rates. AUD/NZD could break the 1.12 top seen in 2018 and reach new highs," SocGen adds. 

Source:
Société Générale Research/Market Commentary

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