AUD/NZD potential upside near term – ANZ

Both the AUD and the NZD have had strong performances in the last couple of months, partly due to domestic conditions and the rest motivated by a weaker greenback.
AUD/UZD on the contrary has declined from the 1.3280 region in mid December to a 3-month low at 1.2826 on February 2.

R.Yetsenga, Global Head of FX Strategy at ANZ, sustains that the downside could be exhausted, and the likelihood of a correction should be near. He also justifies the possible reversal in Australia’s strong position regarding its balance of payments and the higher interest rates levels.

The RBA will hold its first monetary policy meeting of 2012 tomorrow and most of the market participants expect a 25bps cut in the overnight interest rate, taking the benchmark to 4.0%. The analyst is against this opinion and expects the Australian monetary authority to leave the interest rate unchanged. “With the Australian front end still pricing in 90bps of easing this year, the adjustment in market expectations following an RBA on-hold decision tomorrow could be quite significant”, he stressed.

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