Despite a wobble late April, AUD/NZD has rallied solidly since mid-March, in a channel from just above 1.06 to just below 1.10. Economists at Westpac expect the pair to simmer a move higher towards the 1.14 mark.

AUD/NZD may be due for some consolidation short-term

“While the NZ$ yield premium over A$ should remain for some time, we see markets trimming the scale of RBNZ tightening ahead (we see a 3% OCR peak versus >4% priced in).”

“Although pricing for the RBA extends well beyond Westpac’s view of a 2% cash rate peak, near-term the momentum should be in favour of RBA delivering substantial tightening.”

“AUD/NZD may be due for some consolidation short-term, perhaps as far as sub-1.08. But this would only be a pause, with multi-week/month scope for a push towards model fair value around 1.14.”