10 Jul 2015
Stay short the commodity bloc – Westpac
FXStreet (Barcelona) - Robert Rennie of Westpac Global Markets Strategy Group, maintains a bearish outlook on commodity currencies, targeting USD/CAD at 1.30, NZD/USD at 0.6550 and AUD/USD at 0.73.
Key Quotes
“We have run with a strong short commodity bloc currency bias for many week now. We have been short NZD from 0.7225 (10/6), long USD/CAD from 1.2250 (18/6) and more recently short AUD from 0.7683 (30/6). Now we fully expect to see further short term volatility here over the next week and a half over critical risk events including Janet Yellen’s speech Friday and testimony Wednesday/ Thursday next week; Greece on Monday morning; China data through next week; the BoC outcome; the ECB and NZ CPI. But what is clear is that bulk commodity prices have dropped materially and we see risks this continues given increased supply.”
“It is not Greece, but China that has been key in our views here, the ensuing slump in the terms of trade, alongside heightened risk aversion that have driven our more negative commodity bloc outlook.”
“Odds favour a rate cut from the BoC next week and we forecast a rate cut from the RBNZ the following week. We target 0.73 on AUD; 0.6550 on NZD and 1.30 on USD/CAD.”
Key Quotes
“We have run with a strong short commodity bloc currency bias for many week now. We have been short NZD from 0.7225 (10/6), long USD/CAD from 1.2250 (18/6) and more recently short AUD from 0.7683 (30/6). Now we fully expect to see further short term volatility here over the next week and a half over critical risk events including Janet Yellen’s speech Friday and testimony Wednesday/ Thursday next week; Greece on Monday morning; China data through next week; the BoC outcome; the ECB and NZ CPI. But what is clear is that bulk commodity prices have dropped materially and we see risks this continues given increased supply.”
“It is not Greece, but China that has been key in our views here, the ensuing slump in the terms of trade, alongside heightened risk aversion that have driven our more negative commodity bloc outlook.”
“Odds favour a rate cut from the BoC next week and we forecast a rate cut from the RBNZ the following week. We target 0.73 on AUD; 0.6550 on NZD and 1.30 on USD/CAD.”