Get ready for another attempt at parity between the Australian and New Zealand dollars, says the Goldman Sachs FX strategy team.
In a note released over the weekend, strategists Silvia Ardagna, Robin Brooks, Michael Cahill and Lorenzo Incoronato, said the Kiwi is likely to outperform the Aussie in the ultra near-term, potentially paving the way for yet another attempt at parity between the two antipodean currencies.
While it has come close on many occasions, the Kiwi is yet to trade through parity with its Australian namesake.
“We like long positions in NZD/AUD and think NZD/AUD can move close to parity,” the quartet wrote on Sunday.
The factor underpinning the call is a recent divergence between Australian and New Zealand economic data, with the bank suggesting that things are looking a little stronger across the ditch than win Australia.
“Australia and New Zealand are both on the path to recovery, with growth strengthening and inflation accelerating. But, in the near term, data suggest that the momentum is stronger in New Zealand,” the Goldmans strategists say.
“In New Zealand, activity and employment data are stronger than in Australia and dairy prices continue to move higher, providing a positive impulse to inflation.”
They also suggest that in the near term, some fiscal easing is also likely in New Zealand given the need to rebuild infrastructure damaged by recent earthquakes, further supporting the Kiwi against the Aussie.
Goldman describes the trade idea as a “tactical opportunity” that its expects to see in the very near term, noting that within three months the Aussie will likely start to outperform as a substantially improved current account position leads markets to begin pricing in a rate hike from the Reserve Bank of Australia in late 2017 with some probability.
The NZD/AUD currently trades at .9567