AUD/USD 1 day: Stuck in a sideways range between 0.7300 and 0.7440.
AUD/USD 1-3 month: Eventual resumption of the strong US dollar trend should weigh on the AUD during the next few months. The next major downside target is 0.7000.
NZD/USD 1 day: Stuck in a sideways range between 0.6500 and 0.6650.
NZD/USD 1-3 month: We look to our next major downside target at 0.6200 which was a low in July 2009. The two main factors expected to contribute to NZD/USD weakness during the next few months are RBNZ easing (we expect the OCR to fall to 2.00% by January) and Fed tightening (FF mid-point to rise by 25bp in September).
AUD/NZD 1 day: Supported at 1.1100.
AUD/NZD 1-3 month: The RBA will probably remain on hold (albeit with easing risk), while the RBNZ is currently in easing mode. Expected RBA vs RBNZ direction thus favours AUD/NZD over the medium term. The next major target is 1.1580.
AU swap yields 1 day: The 2yr should open around 2.08% while the 10yr should open around 3.09%.
AU swap yields 1-3 month: The 2yr is locked in a slightly descending range of 2.00%-2.20%, while the 10yr continues to follow the US 10yr.
NZ swap yields 1 day: NZ 2yr swap rates should open unchanged at 2.87%, while the 10yr should open up 1bp at 3.64%.
NZ swap yields 1-3 month: Short maturity NZ interest rates should fall further during the next few months. The RBNZ should deliver another 25bp at the September meeting and signal even more after that. We thus target a 2yr swap rate of 2.65% during the next few months. The 10yr yield will be partly influenced by the RBNZ’s easing cycle but will also be hostage to expectations Fed policy will tighten in September. We target 3.7
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