29 Jan 2015
USD to extend gains vs NZD, CAD, EUR - Westpac
FXStreet (Bali) - According to Sean Callow, FX Strategist at Westpac, the current macro picture should allow the USD to extend gains versus NZD, EUR and CAD.
Key Quotes
"The RBNZ is not committed on the direction of the next move on rates. No one is betting on the 3.5% cash rate needing to be raised this year, so markets should price in growing rate cut risks. NZD TWI remains too high for the RBNZ’s liking, having hit a 5 month high early Jan."
"CAD of course continues to suff er from weakness in oil and natural gas prices, damaging exports and business investment. USD/CAD should keep trending higher, to 1.27 and perhaps 1.30 multi-week."
"The euro story meanwhile has not changed, despite some occasional bouts of profi t-taking on short positions. The main factor behind our EUR/USD 1.10 projection over 1 month is the ECB’s EUR60bn in monthly asset purchases. But talk of fragmentation of the eurozone has returned for the fi rst time since mid-2012, as Greece’s new government pledges relief from the austerity imposed by the ECB/IMF/EU ‘troika’ of lenders. The Athens stock index has slumped -15% so far this week. It seems Greece will add to the reasons to be bearish EUR for quite some time."
Sean Callow, Sydne
Key Quotes
"The RBNZ is not committed on the direction of the next move on rates. No one is betting on the 3.5% cash rate needing to be raised this year, so markets should price in growing rate cut risks. NZD TWI remains too high for the RBNZ’s liking, having hit a 5 month high early Jan."
"CAD of course continues to suff er from weakness in oil and natural gas prices, damaging exports and business investment. USD/CAD should keep trending higher, to 1.27 and perhaps 1.30 multi-week."
"The euro story meanwhile has not changed, despite some occasional bouts of profi t-taking on short positions. The main factor behind our EUR/USD 1.10 projection over 1 month is the ECB’s EUR60bn in monthly asset purchases. But talk of fragmentation of the eurozone has returned for the fi rst time since mid-2012, as Greece’s new government pledges relief from the austerity imposed by the ECB/IMF/EU ‘troika’ of lenders. The Athens stock index has slumped -15% so far this week. It seems Greece will add to the reasons to be bearish EUR for quite some time."
Sean Callow, Sydne