Outlook for antipodean cross and rates - Westpac

Analysts at Westpac offered an outlook for the antipodean cross and rates.

Key Quotes:

"AUD/NZD 1 day: (1.0410) 1.0335-60 is an increasingly important support zone. A close above resistance 1.0450-65 could still suggest that a corrective base formed for a retest of 1.0565-70.

AUD/NZD 1-3 month: Higher to the 1.0650-1.0770 area, mainly for valuation reasons. The cross remains well below fair value estimates implied by interest rates, commodity prices and risk sentiment.

• AU swap yields 1 day: The 3yr and 10yr should open around 2.15% and 3.05% as curves steepen and yields follow US
• AU swap yields 1-3 month: The 3yr has probably based at 1.60%, the RBA expected to sit tight at a 1.5% cash rate for some time. (7 Nov)
• NZ swap yields 1 day: NZ 2yr swap rates should open at 2.47%, the 10yr at 3.59%, also following US.

NZ swap yields 1-3 month: The RBNZ ended its easing cycle on 10 Nov and will remain on hold for a long time. Inflation pressures are not evident and short end pricing seems unwarranted. The long end free continues to follow offshore yields and curve steepening trends should continue."