Halister News

(Bloomberg) -- AUD/NZD may extend losses if New Zealand 1Q GDP growth, expected to see the biggest quarterly decline in two years, beats estimates, writes Bloomberg strategist Michael G. Wilson.

• AUD/NZD fell 1.3% last week to close at 1.0451, the weakest since May last year
• Leveraged funds increased net NZD longs for the week ended June 7, according to CFTC date; funds moved to AUD shorts from longs for same period
  • Net NZD longs jumped 54% to 16,684 contracts, the most in two years, while the funds became net AUD sellers for the first time in more than three months
• Expected decline in GDP growth, based on median est of 15 economists surveyed by Bloomberg, is the biggest since March 2014, leaving room for an estimate beat
  • Growth is seen slowing to 0.5% q/q, from 0.9% in the prior qtr, according to survey; range 0.3% to 0.8%, with data due Thursday at 10:45am local time
• Markets may have underestimated the effects of RBNZ rate cuts on economy
  • The central bank cut cash rates four times in 2H 2015, the most since the global financial crisis when it reduced rates three times in 2009, and four times in 2H 2008
  • While ANZ is predicting a 0.5% q/q GDP growth, it said this week that 2Q activity, such as rising home prices & improving job & income data, are “generally hinting” that 1Q softness is likely to be temporary
  • Also expects a small gain in GDT auction prices this week, which runs against RBNZ’s lower-for-longer dairy price outlook
• Nearside AUD/NZD support is 1.0354, the 23.6% Fibonacci retracement and adjacent to the 1.0337 May 5, 2015, horizontal support
• AUD/NZD is up 0.1% to 1.0468