ANZ raises AUD and NZD forecasts
Daniel Been, head of research at FX & G-3 at ANZ, in a note to clients wrote that interest rate differentials have played a role in the appreciation of the Australian (AUD) and New Zealand (NZD) dollar, but this factor is no longer significant. He added that the weakening of quarantine around the world and the consequent correction in the pace of global economic growth means that no currency will fall as much or as sharply as ANZ thought before.
While the fate of the world economy will remain the central theme determining the value of both currencies, the difference in the approach of Australia and New Zealand to non-traditional policies is likely to keep the AUD/NZD cross closer to 1.10. The interest rate differentials are likely to play a secondary role in times of strong risk appetite. New Zealand currency will rise in some crosses (like JPY) and will behave worse towards more profitable currencies like AUD.
According to the new forecast, AUD/USD in June 2020 will be 0.64 (vs. 0.60 previously), in September - 0.62 (0.54), in December - 0.60 (0.56); for NZD/USD it is respectively: 0.60 (vs. 0.57 previously), 0.57 (0.53) and 0.55 (0.55).