Investors are recommended to buy AUD/NZD put spreads given the current market conditions, BNP Paribas says. It thinks the AUD/NZD cross appears very stretched relative to swap spreads, while the technical outlook is turning negative. AUD has lost its status as the "king" of the commodity currency bloc, it adds, and BNPP initiates a short AUD/NZD recommendation via options at 1.2975, targeting 1.24. Specifically, BNPP recommends buying an AUD/NZD three-month 1.30-1.24 put spread, using a spot reference of 1.30, which costs 180bps with a maximum payout of 600bps.
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