NZD: AUD/NZD Divergence Trade Has Room To Extend Further – Nomura

Nomura FX Strategy Research argues that NZD is likely to remain on the back foot, with outgoing RBNZ Governor Wheeler repeating the bank’s view that a lower currency “is needed”.

In particular, Nomura thinks that NZD under-performance is likely to more expressed against AUD.

"The divergence in the underlying momentum of the respective economies, adjustment in the ratio of commodity price baskets and shift in market sentiment over the medium-term outlook for monetary policy in Australia should keep AUD/NZD supported.

On the AUD side, the partial data released so far point to a decent pick-up in Q2 GDP (released 6 September), and we think the RBA should continue to sound confident about the outlook but convey no urgency about raising rates," Nomura argues.

Source: Nomura Securities ResearchOriginal Article