According to a research note by strategist Michael Cahill
- Now sees NZD/USD at 0.70 in 3M, 0.71 in 6M, 0.73 in 12M
- Previous forecast of 0.74 in 3M, 0.75 in 6M, 0.77 in 12M
- Cites change to subdued inflationary pressures in New Zealand
- Says that price pressures may have begun to pick up in Australia, but not in NZ
- Now sees AUD/USD at 0.78 in 3M, 0.80 in 6M, 0.82 in 12M
- Previous forecast of 0.81 in 3M, 0.82 in 6M, 0.82 in 12M
- Cites change to shift in relative preference for AUD
- Bearish outlook for iron ore prices is still there
- That will continue to constrain AUD/USD
Interestingly, their near-term to long-term forecasts for both the pairs indicate that they should be higher than where we are trading now.
In essence, their call feels more like one that is geared towards a weaker dollar in the near-term. Meanwhile, the longer-term call seems more related to do with the RBA and RBNZ as the two central banks are only expected to start hiking rates in Q2 and 2H 2019 respectively.
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