1. The economies of these two countries have a strong structural link because of their geographic proximity. In fact, together they represent a single economic zone.
2. The interest rate in New Zealand is 0.25%, in Australia – 0.1%. As is well-known, capital flows in countries with a higher interest rate. In our case, it is a plus towards New Zealand’s financial karma.
3. Other macroeconomic factors also point towards the relative strength of the Kiwi dollar: a relatively low unemployment rate (compared to Australia) and a higher inflation rate which makes the country stick to tight monetary policy.
Based on the abovementioned facts, the forecast for the medium term is the following: AUDNZD will fall.
This content is for informational purposes only and is not intended to be investing advice.
