Looking around the corner – Rabobank

Given expectations that the Fed, ECB and various other G10 central banks expect further rate cuts during the fourth quarter, the impact of RBNZ policy easing on NZD exchanges is likely to be offset, notes Jane Foley, currency strategist at Rabobank.

Escalation in Middle East to undermine AUD and NZD

“While an announcement of a 50bps rate cut next week would likely push the NZD further lower, we would expect buyers to exit the dips below the NZD/USD 0.62 level on optimism that stimulus Chinese will boost regional demand for New Zealand. exports.”

“That said, given the RBA’s less dovish stance, we’d look for AUD/NZD to continue its recent trend towards 1.11 on a 3-month view. A clear caveat to the recent better tone in both the AUD and NZD is the outlook for the broader tone in risk appetite.”

“Further escalation of tensions in the Middle East would support the USD and undermine the AUD and NZD. This risk underscores our preference for the AUD/NZD trade.”