Commodity currencies in focus - Nomura

Analysts at ANZ explained that the NZD remains on the back foot, with outgoing RBNZ Governor Wheeler repeating the bank’s view that a lower currency “is needed”. 

Key Quotes:

"In the wake of the speech, AUD/NZD hit our 1.10 target. 

The divergence in the underlying momentum of the respective economies, adjustment in the ratio of commodity price baskets and shift in market sentiment over the medium-term outlook for monetary policy in Australia should keep AUD/NZD supported. 

On the AUD side, the partial data released so far point to a decent pick-up in Q2 GDP (released 6 September), and we think the RBA should continue to sound confident about the outlook but convey no urgency about raising rates. 

BoC to raise rates?

Likewise, while we do not expect the BoC to raise rates at next week’s meeting, the positive momentum across the Canadian economy points to further rate hikes in coming quarters. The monetary policy impulse and higher Canadian short-end interest rates should continue to be a CAD positive."