AUD/NZD: headed to 1.10 due to NZ politics? - Westpac

Analysts at Westpac offered their outlook for the Antipodean cross and rates.

Key Quotes:

"AUD/NZD 1 day: Potential for further upside towards 1.10 if uncertainty regarding the NZ government composition persists.

AUD/NZD 1-3 month: A retest of the 1.1200 area seen in April is possible if iron ore’s rally since mid-June continues and global risk sentiment remains elevated. (4 Sep)

AU swap yields 1 day: The 3yr should open around 2.19%, the 10yr around 2.94%.

AU swap yields 1-3 month: Our RBA outlook (on hold for some time) is anchoring short-maturity interest rates and should keep 3yr swap rates in a 1.8% to 2.3% range, as long as core inflation remains below 2%. Longer maturity rates will largely follow US rates. (8 Aug).

NZ swap yields 1 day: NZ 2yr swap rates should open up 1bp at 2.19%, the 10yr up 2bp at 3.19%, in response to AU and US interest rates movement overnight.

NZ swap yields 1-3 month: Our RBNZ outlook (on hold throughout 2018) is anchoring short-maturity interest rates and should keep 2yr swap rates in a 2.1% to 2.6% range, as long as inflation remains below 2%.  Longer maturity rates will largely follow US rates. (8 Aug)"