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Westpac Zero In On Monetary Policy Drivers

AUDNZD

Westpac believe that AUD/NZD has the "potential for further losses towards the 1.04 area. The RBA in November surprised markets in a dovish direction with a significant easing package. In contrast, the RBNZ's November meeting surprised markets in a hawkish direction, failing to deliver any fresh signals that further easing was being contemplated. Yields spreads near term should thus favour the NZD over the AUD. Longer term, though, the opposite could be true, if the RBNZ cuts the OCR to -0.25% by August 2021 (our current forecast). That should push the cross to 1.08 by March 2021."

MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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