Antipodean does not have enough to reverse the flows – bny

Before the global financial crisis, the Aud and the NZD were considered the preferred Carry currencies, especially financed from low performance names in APAC. However, equilibrium rates have fallen a lot in the last two decades as the raw material supercycle ends and the position has not been so favorable, reports Geoff Yu, Bny’s macro strategist.

Domestic productivity challenges generate caution in the RBA

“Even when the RBNZ had the highest rates among the G10 economies, general holdings struggled to enter positive land, although the AU has had sufficient holding periods periods. To date, we can see that the flows in both currencies have been very well aligned. The strongest period of tickets was immediately after the day of release.”

“Given the cross -border nature of the flows, we suspect that they are more aligned with coverage that is being undone. The improved real yields as inflation falls are not enough to generate interest in the cash bonds, which is surprising considering the favorable qualifications of the audience and the liquidity of the market in the ACGBs. We continue to see that the AUD and the NZD APAC long -term. “

“Australia has reversed its balance of payments, while New Zealand efforts for increasing real rates through fiscal retraction are also conducive to the performance of the bonds. The terms of exchange of raw materials will continue to be weak, but the profits sustained in the currencies of the exporters of Apac goods will be reflining for Australia and New Zealand through the external demand channel. Domestic productivity challenges continue to generate caution in the RBA in the midst of their surprising wait and the perspective of the RBNZ, but the inflation of merchant goods will also begin to touch background and support the rates of change effective real antipodes. “