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NZD at risk with vulnerable commodity bloc and global headwinds - BNP

FXStreet (Delhi) – Research Team at BNP Paribas, note that overnight, the commodity currencies have retuned some of their recent strength following support to the USD from Thursday’s US data.

Key Quotes

“New Zealand’s CPI report for Q3 surprised to the upside slightly, although inflation pressures remain very subdued – the y/y pace of inflation stands at a paltry 0.4% (0.3% expected).”

“Going forward, we view that prospects for the commodity currencies are not favourable as global headwinds remain significant and markets are now probably under-pricing risk of further easing from their central banks.”

“With further RBNZ easing not priced until March of next year, we view the NZD is particularly at risk. Similarly, although we no longer expect the Bank of Canada to cut rates next week, with rate markets pricing steady policy now over the next year, there is scope to price in more easing risk if domestic data disappoints, including Friday’s manufacturing sales numbers.”

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