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8 Jul 2013
Flash: AUD/NZD faces headwinds from commodities – Westpac
FXstreet.com (New York) - According to Sean Callow, a Global FX Strategist at Westpac, “The ratio of Australia’s non-rural commodity prices to a similar measure weighted by New Zealand’s key commodity exports is yet to find a base, probing post-GFC lows.”
While dairy prices have pulled back somewhat at recent auctions, underlying demand is strong. When we compare the price of Australia’s iron ore and coal exports to New Zealand dairy prices we again find little joy for AUD/NZD though it has been more stable lately.
Indeed, spot iron ore prices this week rose to highs since late May. Given the movement in relative interest rates and commodity prices, it is no surprise that our short-term fair value estimate continues to fall. It is now around 1.1540.
While dairy prices have pulled back somewhat at recent auctions, underlying demand is strong. When we compare the price of Australia’s iron ore and coal exports to New Zealand dairy prices we again find little joy for AUD/NZD though it has been more stable lately.
Indeed, spot iron ore prices this week rose to highs since late May. Given the movement in relative interest rates and commodity prices, it is no surprise that our short-term fair value estimate continues to fall. It is now around 1.1540.