Analysts at Goldman Sachs have revised down their forecasts for the Australian dollar and the New Zealand dollar in your last note to your clients.
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“Last week, we placed our AUD and NZD forecasts under review, as Australian labor market and inflation data surprised to the upside and our economists advanced their forecasts for the RBA to make its first rate hike to November 2022.
While our monetary policy outlook remains dovish than market prices and the RBA emphasized patience after its February meeting, we see biased risks towards faster tightening. This contrasts with the valuation of the RBNZas the market price valuation exceeds our rate estimate.
The recent upward revisions to our iron ore outlook also argue for a stronger AUD than we had originally anticipated. Having said that, we expect the Fed’s hawkish line and risk concerns to remain headwinds to AUD strength for now.
As a result, we are revising our forecasts to show less performance for the NZD in the AUD/NZD cross and a more limited trajectory for both against the USD.
Now we see the AUD/USD at 0.70, 0.70 and 0.71 in 3, 6 and 12 months (versus 0.74, 0.73, and 0.71 previously) and the NZD/USD at 0.66, 0.66 and 0.67 in 3, 6 and 12 months (versus 0.71, 0.71 and 0.70 previously).
Source: Fx Street
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