The firm argues that this presents a tactical trading opportunity
Strategists at the firm are saying that "as Middle East tensions ease, relative economics will return to focus, and on this front the cross has overshot". Adding that the recent slide in the pair under the 1.04 level provides investors with a tactical trading opportunity.
They recommend going long AUD/NZD at 1.0385 with a target of 1.0620 and that they would reassess the trade on a break below the March 2019 closing low of 1.0290.
I wouldn't argue that they are wrong to go with this line of thinking but it essentially hinges on the notion that they are expecting the RBA not to cut rates on 4 February.
The aussie has gotten a boost from retail sales data today and that sees cash rate futures now only price in ~40% odds of the central bank taking action next month. But if those odds are to rise in the coming weeks, that will act as a major headwind for the aussie.
