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Forex Flash: NZD/USD strategy profile – Westpac

FXstreet.com (Barcelona) - The RBNZ’s OCR review (Wednesday - a day earlier than usual due to ANZAC holiday) is the local highlight next week. According to Global FX Strategist at Westpac, “Further improvements in activity, milk prices, business confidence and housing will be balance by further strength in the NZD but the net tone of the one-pager should imply an upgrade to the OCR outlook.” Other releases include migration (Monday), credit card spending (Monday), and the trade balance (Friday).

Global risks have dominated strong NZ fundamentals lately, flipping NZD/USD momentum to the downside. “Given the sharp recent breakdowns in key global markets such as the S&P 500 and copper and gold, we adopt a bearish bias for the weeks ahead, allowing for as low as 0.8235 (rising channel support). Crosses which better reflect relative fundamentals, such as AUD/NZD, are a better bullish-NZD bet.” Callow adds.

Forex Flash: Market likely to react with disappointment to BCB rate hike by 25bp to 7.50% - TD Securities

The Brazilian Central Bank decided to lift the Selic rate by 25bp to 7.50% overnight, as expected by consensus, but the market was pricing in more than +40bp ahead of the announcement “and is likely to react with disappointment today”, said TD Securities analyst Marcin Budkiewicz, adding that the minimal size of the hike supports the view that the tightening cycle is going to be much less aggressive than markets expect. “If the Copom delivers another 50bp of tightening in the next two meetings, DI futures due July-13 will have to fall by at least 60bp”, continued the analyst, certain of downside adjustment even accounting for uncertainty. “Extending this conclusion to the whole cycle (likely to be less aggressive than expected), the +180bp still priced in for year-end will also have to fall closer to our 75bp forecast”.
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Forex: GBP/USD in highs around 1.5270

The pound has recovered the ground lost after the tepid data from the UK retail sales on Thursday, testing fresh session highs in the vicinity of 1.5265/70...
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