13 Jan 2015
Hold shorts in Antipodean currencies vs USD - JPMorgan
FXStreet (Bali) - One of JP Morgan's macro trade recommendations for 2015 is to hold shorts in Antipodean currencies vs. USD.
Key Quotes
"Data releases out of the Antipodeans since our last publication have been few and indicate a diverging path between Australia and New Zealand."
"Australia’s retail spending and credit growth were both underwhelming. Meanwhile, the releases out of New Zealand were relatively more constructive with business confidence and GDP suggesting that the economy is withstanding the interest rate and dairy prices shocks (GDP revisions help resolve some of NZ's inflation conundrum)."
"Moreover dairy prices appear to have stabilized and have actually increased with prices in GDT auctions nearly 6% higher since early December. While this explains the divergence in relative performance between AUD and NZD in the past month, it does not change the broader poor backdrop for commodities and commodity currencies in general."
"Indeed, data from China continues to be suggestive of ongoing domestic weakness—the PMIs were generally soft and inflation pressures still muted with the PPI printing below consensus and in negative territory near its 3-year low. These relatively poor dynamics for commodity currencies stands in sharp contrast to the still healthy economic activity in the US and is thus supportive of further underperformance of the Antipodeans vs. the dollar
Key Quotes
"Data releases out of the Antipodeans since our last publication have been few and indicate a diverging path between Australia and New Zealand."
"Australia’s retail spending and credit growth were both underwhelming. Meanwhile, the releases out of New Zealand were relatively more constructive with business confidence and GDP suggesting that the economy is withstanding the interest rate and dairy prices shocks (GDP revisions help resolve some of NZ's inflation conundrum)."
"Moreover dairy prices appear to have stabilized and have actually increased with prices in GDT auctions nearly 6% higher since early December. While this explains the divergence in relative performance between AUD and NZD in the past month, it does not change the broader poor backdrop for commodities and commodity currencies in general."
"Indeed, data from China continues to be suggestive of ongoing domestic weakness—the PMIs were generally soft and inflation pressures still muted with the PPI printing below consensus and in negative territory near its 3-year low. These relatively poor dynamics for commodity currencies stands in sharp contrast to the still healthy economic activity in the US and is thus supportive of further underperformance of the Antipodeans vs. the dollar