25 Sep 2013
Flash: AUD/NZD still looks cheap - RBS
FXstreet.com (Barcelona) - AUD/NZD still looks a bit cheap after weaker NZ trade balance, notes Greg Gibbs, FX Strategist at RBS.
Key Quotes
"AUD/NZD still looks somewhat cheap vs. the 2yr yield differential, with both Australian and New Zealand yields largely moving in tandem over recent months, both moderately lower in recent sessions in line with lower yields in the US."
"The trade deficit has blown out in the last two months largely on the back of lumpy aircraft and an oil drilling platform that exaggerate the deterioration. Nevertheless, all categories of imports are rising, including cars and furnishings, reflecting the impact of a strong NZD and strong domestic demand. On the other hand, exports are relying heavily on commodities, indicative of the dampening impact of the NZD on other sectors."
"The larger external deficit may generate larger downward pressure on NZD if fears over Emerging market assets returns."
Key Quotes
"AUD/NZD still looks somewhat cheap vs. the 2yr yield differential, with both Australian and New Zealand yields largely moving in tandem over recent months, both moderately lower in recent sessions in line with lower yields in the US."
"The trade deficit has blown out in the last two months largely on the back of lumpy aircraft and an oil drilling platform that exaggerate the deterioration. Nevertheless, all categories of imports are rising, including cars and furnishings, reflecting the impact of a strong NZD and strong domestic demand. On the other hand, exports are relying heavily on commodities, indicative of the dampening impact of the NZD on other sectors."
"The larger external deficit may generate larger downward pressure on NZD if fears over Emerging market assets returns."