NZD & CAD longs vulnerable - ING

Analysts at ING note that NZD longs were trimmed as a narrower focus on domestic politics (23 September elections) and the threat of RBNZ intervention may have initiated some profit-taking.

Key Quotes

“We expect the positioning adjustment to continue, which points to further NZD downside.”

“Speculative markets remain significantly long CAD going into the BoC meeting on Wednesday and with investors 50:50 over a rate hike this week, we think an on-hold Poloz could be the catalyst for some of the recent bullish CAD sentiment to unwind.”

“Net short USD positions remain close to historic lows - and below the 1 standard deviation band - meaning that markets remain significantly bearish on the greenback. Yet, the lack of data or external catalysts to initiate a normalisation in positions means that this negative USD sentiment may continue in the near-term.”