MUFG: Long AUD/NZD Attractive for an extended move above 1.10

July 08, 2024 at 07:21PM
MUFG sees the long AUD/NZD trade as attractive due to diverging monetary policies between the RBA and RBNZ. The AUD has outperformed the NZD over the past month, driven by speculation of RBA policy shifts, while the RBNZ is expected to remain on hold.

Key Points:

Performance Divergence: AUD has been the best performing G10 currency (+1.3% vs. USD) over the past month, while NZD has been the second worst (-1.2% vs. USD).

RBA Speculation: The AUD’s strength is driven by speculation that the RBA will diverge from other G10 central banks, potentially raising rates.

RBNZ Hold: The RBNZ is expected to remain on hold after delaying rate cuts to the second half of next year, despite indicating potential for further rate hikes if needed.

New Zealand Data: Softer activity and inflation data in New Zealand are not supportive of higher rates or a stronger NZD.

AUD/NZD Outlook: MUFG expects AUD/NZD to continue its rise beyond the 1.1000-level.

Conclusion:

MUFG favors a long AUD/NZD position due to expected RBA policy divergence and weaker New Zealand economic data. This divergence supports the continued outperformance of the AUD over the NZD, making the long AUD/NZD trade attractive.

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This article was written by Adam Button at www.forexlive.com.

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Payment services for HUBFX are provided by The Currency Cloud Limited. Registered in England No. 06323311. Registered Office: Stewardship Building 1st Floor, 12 Steward Street London E1 6FQ. The Currency Cloud Limited is authorised by the Financial Conduct Authority under the Electronic Money Regulations 2011 for the issuing of electronic money (FRN: 900199) and The Currency Cloud Inc. which operates in partnership with Community Federal Savings Bank (CFSB) to facilitate payments in all 50 states in the US. CFSB is registered with the Federal Deposit Insurance Corporation (FDIC Certificate# 57129). The Currency Cloud Inc is registered with FinCEN and authorized in 39 states to transmit money (MSB Registration Number: 31000160311064). Registered Office: 104 5th Avenue, 20th Floor, New York , NY 10011 and CurrencyCloud B.V.. Registered in the Netherlands No. 72186178. Registered Office: Nieuwezijds Voorburgwal 296 – 298, Mindspace Nieuwezijds Office 001 Amsterdam. CurrencyCloud B.V. is authorised by the DNB under the Wet op het financieel toezicht to carry out the business of a electronic-money institution (Relation Number: R142701)

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