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13 Mar 2015
Risk of AUD/NZD reaching parity in coming months - Rabobank
FXStreet (Bali) - Jane Foley, Senior Currency Strategist at Rabobank, sees the risk of AUD/NZD reaching parity in the coming months.
Key Quotes
"The RBNZ’s March policy statement maintains the projections that “on a trade-weighted basis, the New Zealand dollar remains unjustifiably high and unsustainable in terms of New Zealand’s long-term economic fundamentals.” However, the power of this statement if severely restricted by the preceding statement that “the domestic economy remains strong”.
"In an environment where so many other central banks have been increasing monetary accommodation, the NZD will find support from the carry trade. Earlier this month AUD/NZD touched a low around 1.0283 before bouncing back moderately."
"Last week RBA Governor Stevens reported that the Australian “economy is likely to be operating with a degree of spare capacity for some time yet” and that growth in its largest trading partner China is widely expected to slow."
"By contrast in its March Monetary Policy Statement the RBNZ state that “a wide range of indicators suggests that strong output growth (in New Zealand) has been steadily absorbing spare capacity over the past few years, and continues to do so”. Although we see risks to the New Zealand economy from the impact of drought on the diary sector and from slowing growth in China, we do see the risk of AUD/NZD reaching parity in the coming months."
Key Quotes
"The RBNZ’s March policy statement maintains the projections that “on a trade-weighted basis, the New Zealand dollar remains unjustifiably high and unsustainable in terms of New Zealand’s long-term economic fundamentals.” However, the power of this statement if severely restricted by the preceding statement that “the domestic economy remains strong”.
"In an environment where so many other central banks have been increasing monetary accommodation, the NZD will find support from the carry trade. Earlier this month AUD/NZD touched a low around 1.0283 before bouncing back moderately."
"Last week RBA Governor Stevens reported that the Australian “economy is likely to be operating with a degree of spare capacity for some time yet” and that growth in its largest trading partner China is widely expected to slow."
"By contrast in its March Monetary Policy Statement the RBNZ state that “a wide range of indicators suggests that strong output growth (in New Zealand) has been steadily absorbing spare capacity over the past few years, and continues to do so”. Although we see risks to the New Zealand economy from the impact of drought on the diary sector and from slowing growth in China, we do see the risk of AUD/NZD reaching parity in the coming months."