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Buy AUD for NZD Can be Next Big Trade Idea

September 12, 2008 at 10:08 by Andriy Moraru

Australian dollarThe Australian currency may experience considerable gains against the New Zealand dollar soon as the New Zealand’s central bank showed commitment to the extreme rate cutting in the fear of recession, while Australian central bank may refrain from changing the rate for now.

Over the next year, New Zealand’s interest rate may decline by as much as 1.28 percent according to the traders’ futures betting. Meanwhile, the chances that the Reserve Bank of Australia will cut rate below 7 percent in October have dropped significantly on better employment reports.

Analysts believe that there might come convergence between the New Zealand and Australian interest rates. If that happen markets will move in the AUD’s favor, because such fundamental change is still not priced into the Forex market.

According to some investment banks’ recommendation AUD/NZD rate may rise above 1.3000 level in the next few months.

Today AUD/NZD dropped slightly — from 1.2293 to 1.2281 with some insignificant volatility in both directions. It’s an expected correction that follows the two days of the record fast growth.

If you have any questions, comments, or opinions regarding the New Zealand Dollar, feel free to post them using the commentary form below.

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