AUD/NZD expected to reach 1.05 in Q4 – TDS

In view of researchers at TD Securities, the cross could test the 1.05 area at some point in the fourth quarter.

Key Quotes

“We see higher political risk to the economy from the Labour/NZ First coalition government, with NZ First policies focusing on cutting immigration, reducing offshore ownership of assets and altering the RBNZ's mandate. We still look for a step up in hawkish RBNZ rhetoric with the November Monetary Policy Statement from Spencer, especially with a likely increase in fiscal stimulus and a weaker kiwi dollar moving forward”.

“NZD has fallen sharply after an unexpected election coalition outcome, but a lot of bad news is now in the price. Attention now shifts to the next RBNZ governor - and mandate - and how policy may evolve from here. This may leave the NZD on shaky ground near-term, but selling pressure should soon become exhausted. This should help cap AUDNZD where we have 1.05 pencilled in for end-Q4”.