Bond yields aren’t helping AUD much. NZD, on that basis, is a better choice, in the view of economists at Société Générale.

Frustration continues, Down Under

“The AUD remains incredibly frustrating. The RBA is considering a pause in monetary tightening, as a result of which relative rate expectations (and yields) have not really moved significantly in its favour.” 

“China’s reopening and a less hawkish Fed ‘ought’ to be helping, but if rates remain firmly anchored, the impact will be softened.” 

“We get a much more encouraging relative rate picture by looking at the RBNZ, even if New Zealand’s terms of trade and balance of payments are much less inspiring and its growth prospects took a weather-hit in recent months. Still, if we were to buy one of these two against a weakening Dollar, it would be the Kiwi, and a serious test of AUD/NZD parity can’t be ruled out this year.”