AUD and NZD Pair Outlook

There is a probability of a 1:1 exchange rate between Australia and New Zealand as the currency pair is trading at a lower and steadier path.

AUD and NZD peaked at 1.0798 and even went up 1.0108 although parity is seen within the next few weeks.

Market experts say a rate reduction by the Reserve Bank of Australia will certainly push the currency pair towards parity as interest rate differential between the two will continue to expand.

This may be a problem for both economies but more for New Zealand which is confronted with lower demand because of declining prices of milk. The appreciating currency can affect growth of other export products.

Meanwhile, the Reserve Bank of New Zealand is expected to react to the Aussie dollar and Kiwi exchange rate just like in the past.

Analysts say the RBNZ may even intervene if the Aussie central bank cuts rates next week to prevent a freefall of the AUD and NZD exchange rate. They believe that FOREX markets will obtain momentum and price moves can be extremely unstable surpassing fundamental drivers.

The problem is contesting a currency’s escalation may be difficult prospect and the Kiwi seems to merit high valuation. Economic forecasts have pointed out that steady for the rest of this year while the Australian currency must become stronger on its own.

However, observers maintain there is inadequate economic momentum that can lead to a stronger Australian dollar. Nevertheless, stakeholders still see parity between these two currencies.