Analysts at Westpac exlained their market outlooks for the antipodeans.

RBA preview: what to expect in AUD/USD?

Key Quotes:

"AUD/USD 1 day:  Remains in a week-old 0.7490-0.7615 range, but event risk today is high given the RBA decision.

AUD/USD 1-3 month: The RBA’s easing bias combined with the Fed’s tightening bias should push the AUD lower towards 0.74 by year end, although recent BOE and BOJ easing have made the AUD even more attractive to global investment flows such that a test of 0.78 is possible first. (1 Aug)

NZD/USD 1 day: Continues to test the 0.7300-0.7350 resistance area.

NZD/USD 1-3 month:  The RBNZ’s easing cycle combined with the Fed tightening in December should push the NZD lower towards 0.70 by year end, although recent BOE and BOJ easing have made the NZD even more attractive to global investment flows such that a rise to the 0.75 area is possible first. (1 Aug)

AUD/NZD 1 day: The downside around 1.0340-50 remains vulnerable. Event risk today is high given the RBA decision.

AUD/NZD 1-3 month: The RBNZ is likely to cut again in November, and should maintain a more dovish outlook than the RBA. In addition, the cross is well below fair value implied by interest rates, commodity prices and risk sentiment. We target 1.08. (15 Aug)

AU swap yields 1 day: The 2yr should open at 1.61% while the 10yr should open at 2.08%.

AU swap yields 1-3 month: If the RBA sits tight at 1.5% during the remainder of this year the 2yr should eventually find a base around 1.60%. However the main risk is that markets continue to price in a sub-1.5% cash rate. (15 Aug)

NZ swap yields 1 day: NZ 2yr swap rates should open down 1bp at 2.00%, while the 10yr should open unchanged at 2.45%.

NZ swap yields 1-3 month: Slightly lower. The OCR is likely to be cut to 1.75% in November. That should result in a 2yr swap rate of around 1.90%, although the risk is it could be lower if markets expect a 1.5% terminal OCR. (15 Aug)."