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POLL-Australian, NZ dlr forecasts cut again, bears already ahead

Published 07/09/2018, 03:00 pm
Updated 07/09/2018, 03:10 pm
© Reuters.  POLL-Australian, NZ dlr forecasts cut again, bears already ahead
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* reuters://realtime/verb=Open/url=cpurl://apps.cp./Apps/fx-polls?RIC=AUD= AUD poll data

* reuters://realtime/verb=Open/url=cpurl://apps.cp./Apps/fx-polls?RIC=NZD= NZD poll data

* Aussie median f'cast at $0.73 in 3 months, $0.75 1 year out

* Kiwi median f'cast $0.67 in 3 month, $0.6900 in 1 year

By Wayne Cole

SYDNEY, Sept 7 (Reuters) - Foreign exchange analysts have again cut forecasts for the Australian and New Zealand dollars, but are struggling to keep up with the pace of actual declines as turmoil spreads quickly for one emerging market to another.

A Reuters survey of 40 analysts saw median predictions for the Aussie downgraded by around one to two U.S. cents across the forecast horizon. It was now put at $0.7275 in one month, down from $0.7400 in the previous poll.

The shift still trailed reality, given the currency was changing hands at $0.7165 AUD=D3 on Friday, having fallen more than two cents in the past month as fears of a Sino-U.S. trade war fuelled selling of Chinese and emerging market assets.

The more distant outlook was likewise lowered, yet continued to predict better days ahead for the currency. The median forecast put the Aussie at $0.7300 in three months, $0.7400 in six months and $0.7500 on a one-year horizon.

The most bearish call came from Morgan Stanley (NYSE:MS) which saw the currency at $0.7000 in a month and $0.6800 in three, though the latter was assumed to be the low point of this cycle.

Hindering the Aussie has been the scant chance of any hike in domestic interest rates for months to come. The Reserve Bank of Australia (RBA) has repeatedly emphasised it is in no hurry to tighten given subdued wages and inflation, while welcoming a lower currency as a boost to both.

Even a blisteringly strong reading on June-quarter economic growth out this week did not alter market wagers 0#YIB: that a central bank hike would not come until 2020. a result, yields on Australian 30-year debt AU30YT=RR fell below those on U.S. bonds for the first time ever this week, taking the entire yield curve under U.S. Treasuries.

That leaves the Aussie with no rate support should President Donald Trump act on his threat to impose tariffs on another $200 billion of Chinese imports.

"If Trump goes 'full bore' this month then it is realistic to believe that sub-$0.70 will be seen for the AUD," says NAB's head of FX strategy Ray Attrill.

"With no meaningful prospect of a truce on tariffs this month, AUD risks are very much skewed to the downside."

The currency is already dangerously close to major chart support in the $0.7140/60 zone and a break would open the way for a re-test of the 2016 trough around $0.6830.

The kiwi dollar was in much the same straits, with the Reserve Bank of New Zealand (RBNZ) adding the extra risk of a possible cut in interest rates to the mix. cut their kiwi forecasts by a cent to $0.6700 for one month and three months, with $0.6750 and $0.6900 pencilled in for six and 12 months respectively.

The market was again moving faster with the kiwi already down at $0.6576 NZD=D3 and near its lowest since early 2016.

"The multi-month downward trend should resume and extend to $0.6400 by year-end," said Westpac analyst Imre Speizer.

"The key factors behind the downward trend are a higher U.S. dollar, a falling NZ/U.S. yield spread, and an increasingly dovish RBNZ."

(For other stories from the global foreign exchange poll: ( (Editing by Eric Meijer)

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