Analysts at Goldman Sachs revised down their forecasts for the Australian and Kiwi dollar to range-bound in their latest client note.
"Last week, we placed our AUD and NZD forecasts under review as inflation and labor market data in Australia surprised to the upside and our economists pulled forward their forecast for RBA lift off to November 2022.
While our monetary policy outlook remains more dovish than market pricing and the RBA emphasized patience following its February meeting, we see the risks as skewed towards more rapid tightening getting priced. This contrasts with RBNZ pricing, which already exceeds our estimate of the terminal rate.
Recent upward revisions to our iron ore outlook also argue for more AUD upside than we had originally anticipated. All that said, we expect more hawkish Fed pricing and concerns about the risk backdrop to remain headwinds to AUD strength for now.
As a result, we are revising our forecasts to show less NZD outperformance on the AUD/NZD cross and a more range-bound path for both vs USD, including a mark-to-market following a USD move higher on net over the past few weeks.
We now see AUD/USD at $0.70, $0.70 & $0.71 in 3-, 6- and 12-months (vs $0.74, $0.73 & $0.71 previously) and NZD/USD at $0.66, $0.66 & $0.67 in 3, 6- and 12-months (vs $0.71, $0.71 & $0.70 previously)."
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