FXStreet (Edinburgh) – Senior Currency Strategist at Rabobank Jane Foley has given her views on the comm-bloc currencies.
Key Quotes
“It has not been an easy 24 hours for commodities currencies. On a one day view the AUD, followed by the NZD, CAD and NOK have been the worst performing developed world currencies. Unsurprisingly the common denominator behind the move is softness in commodity prices”.
“We have been arguing for some time that the weakness of both coal and iron ore prices increases the chances of further monetary stimulus from the RBA… Counter to market expectations, we forecast that the RBA could be persuading to cut rates twice more this cycle and we expect AUD/USD to trend lower towards 0.72 medium-term”.
“It is downside pressure on dairy prices which are the thorn in the side of the New Zealand economy currently. At this week’s Global Dairy Trade auction the GDT price index dropped 5.9% from the last sale to record a ninth consecutive decline”.
“That said, the RBNZ has made no secret of its view that the NZD has been overvalued for years and is still too strong despite recent falls. Following its June rate cut, the RBNZ made clear that further easing could be “appropriate” and we expect another rate cut later this year to continue undermining the value of NZD/USD. We have revised down our 6 mth NZD/USD forecast to 0.65 by year end”.
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