Explore eFXplus Derived Data That Drive Results
A Data Partner of:
Refinitiv
Mar 21 - 10:55 AM

Credit Agricole: Maintaining Long AUD/NZD Position Following Australia's Employment Report

By eFXdata  —  Mar 21 - 10:15 AM

Synopsis:

Credit Agricole continues its bullish stance on AUD/NZD, targeting 1.12, after analyzing the recent Australian employment data and New Zealand's economic performance. The February employment report from Australia showed a significant increase in jobs, although the Reserve Bank of Australia (RBA) is expected to keep rates steady until late 2024. Meanwhile, New Zealand faces economic challenges, including a technical recession, which could prompt the Reserve Bank of New Zealand (RBNZ) to initiate rate cuts in the latter half of 2024.

Key Points:

  • Australia's Job Market: February saw a notable rise in Australian employment, with 116.5k jobs added. The unemployment rate fell to 3.7%, nearing 50-year lows. These figures, however, may be inflated due to seasonal adjustments, with the RBA likely to focus on more stable labor market indicators.
  • New Zealand's Economic Downturn: New Zealand has entered a double-dip recession, with a contraction in Q4 GDP. The economy struggles under high policy rates and adverse weather conditions, though an end to La Nina could provide relief.
  • RBA and RBNZ Rate Expectations: Despite the robust employment figures, the RBA is not anticipated to cut rates until late 2024. In contrast, New Zealand's economic woes may lead the RBNZ to cut rates sooner, potentially following the Fed's lead.
  • AUD/NZD Outlook: Credit Agricole's long position on AUD/NZD is supported by Australia's labor market strength and New Zealand's economic challenges. The bank targets the AUD/NZD cross to reach 1.12, propelled by the recent data from both countries.

Conclusion:

Credit Agricole reinforces its long AUD/NZD strategy, driven by Australia's resilient job market and New Zealand's economic difficulties. The bank's target of 1.12 for the currency pair reflects expectations of divergent monetary policy paths between the RBA and RBNZ. The analysis underscores the importance of labor market indicators and economic performance in shaping currency strategies.

Source:
Crédit Agricole Research/Market Commentary

Subscription

  • eFXplus
  • End-user license agreement (EULA)

About

  • About
  • Contact Us

Legal

  • Terms of Service
  • Privacy Policy
  • Disclaimer
© 2024 eFXdata · All Rights Reserved
!