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NZD: All set to slide again, downtrend in play - Westpac

FXStreet (Delhi) - Imre Speizer, Senior Markets Strategist at Westpac, suggests that we remain bearish on the NZD and target a break below 0.6235 this week which would take it to a fresh six-year low (ignoring the blip on 24 Aug) and resume the downtrend.

Key Quotes

“While dairy prices have rebounded from a multidecade low, global risk aversion and the likelihood the RBNZ will cut the OCR again in December should limit any short term rallies during the weeks ahead to 0.6500.”

"3 months ahead: The next major target area is 0.62, a level which provided support during the middle of 2009. If that gave way, we would target 0.60. 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 2.5% by year end and eventually to 2.0%) and eventual Fed tightening. The RBNZ has opened the door to an OCR below 2.5%, courtesy of its “downside scenario” discussion in the September Monetary Policy Statement, China and drought risks being major concerns."

"1 year ahead: Our 1 year ahead forecast is 0.62, based on the NZ economy benefitting from the RBNZ’s easing cycle."

AUD/USD: Bulls exhausted near 0.7025, flirting with 0.70

The AUD/USD pair failed to extend beyond 0.7020-25 region and reverted to two-week lows levels below 0.70 handle in mid-Asia, as falling major Asian indices spooked markets, paving way for risk-off sentiment across the financial markets.
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AUD: Prone to downside, risks elevated due to China - Rabobank

Jane Foley, Research Analyst at Rabobank, suggests that we still see risk that the RBA will cut rates again this cycle to provide insulation to the economic outlook – a view which is supported by signs that the housing market activity may at last be peaking. One factor that could slow the RBA’s trigger finger would be a continued fall in the value of Australia’s effective exchange rate. Either way we continue to see downside risks for AUD/USD towards 0.68 on a 6 mth view.
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