Synopsis:

ANZ maintains a mildly constructive outlook for both the AUD and NZD this week, supported by a rebound in risk sentiment and still-light market positioning. Both currencies tend to outperform strongly when sentiment recovers from overly bearish levels, a dynamic playing out as equities bounce. However, tariff uncertainty and global growth headwinds—particularly surrounding the April 2 US trade review—could limit further upside, especially for AUD.

Key Points – AUD:

1️⃣ AUD Benefits from Risk Sentiment Rebound 📈

• Stronger equity markets have sparked renewed investor buying of AUD/USD.

• CFTC data shows net shorts, suggesting room for further covering if sentiment holds.

2️⃣ Tariff Uncertainty and Growth Concerns Cap Upside ⚠️

• April 2 trade review could sour sentiment and trigger AUD pullback.

• Global growth concerns remain a drag on AUD’s medium-term upside.

3️⃣ Upside Target Limited to 0.65–0.66 in AUD/USD 📊

• Near-term view is mildly positive, but cautious not to extrapolate gains too far.

• Better risk-reward seen in AUD/GBP and AUD/EUR on medium-term view.

Key Points – NZD:

1️⃣ NZD Also Supported by Sentiment Rebound 🟢

• ANZ Risk Appetite Index bouncing from deeply negative territory.

• Historical pattern favors NZD outperformance when sentiment recovers.

2️⃣ Still Heavily Shorted, Room for Positioning Squeeze 💥

• CFTC data shows persistent net shorts, which could unwind further.

• Q4 GDP surprise (+0.7%) helped boost confidence after technical recession exit.

3️⃣ Still Lagging on Macro Data, US Data Still Matters 🇺🇸

• NZ continues to underperform on economic surprise indexes.

• Weakness in US data could help NZD, but risks remain two-sided.

Conclusion:

ANZ turns mildly bullish on AUD and NZD this week, with rebounding risk sentiment and light positioning acting as key tailwinds. Still, tariff risks and macro headwinds—especially for AUD ahead of April 2—suggest limited upside, with AUD/USD capped near 0.66 and NZD/USD also constrained unless global sentiment improves further. For now, ANZ sees better medium-term opportunities in AUD crosses, particularly AUD/GBP and AUD/EUR.