BofA update shows where active managers are putting money
Investing.com -- The Australian and New Zealand dollars are consolidating recent gains as trade tensions between the United States and China have eased, while the U.S. dollar failed to recover significant ground. Both currencies have shown less dramatic rallies compared to European currencies, which are benefiting from stronger repatriation flow effects.
Reduced external economic risks related to China may allow the Australian and New Zealand dollars to outperform peers with similarly high sensitivity to risk sentiment in the coming weeks. The New Zealand dollar remains a more attractive option according to ING, as the Reserve Bank of New Zealand has signaled more caution about further monetary easing.
The Reserve Bank of Australia’s dovish stance suggests more room for interest rate cuts, with ING expecting the Australian central bank to deliver two or possibly three more reductions this year. By contrast, ING forecasts only one additional cut in New Zealand as services inflation may prove slow to decelerate.
The erosion of the Australian dollar’s rate advantage relative to the New Zealand dollar indicates that periods of calm in risk assets may favor the New Zealand currency more than its Australian counterpart for the remainder of the year. This changing dynamic reflects the diverging monetary policy paths of the two central banks.
ING maintains its short-term targets of 0.66 for AUD/USD and 0.61 for NZD/USD as both currencies continue to navigate global trade developments and domestic monetary policy adjustments.
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