Societe Generale FX Strategy Research notes that NZD, AUD, and CAD are in the process of tracing out gradual turns against the US dollar.
“Anticipation of a higher milk price forecast from Fonterra this Thursday, and hope of tax cuts on Thursday when a bigger budget surplus is expected to be announced in New Zealand, are boosting NZD which is dragging AUD along behind it; CAD is following at a respectable distance behind,” SocGen notes.
“CAD is more sensitive to oil than the others, and the recent bounce reflects optimism about the upcoming OPEC announcement,” SocGen adds.
Strategy-wise, SocGen thinks that AUD/JPY and NZD/JPY are both attractive longs here, but for a very short-term trade, NZD/JPY is the one with most to gain from Thursday’s Budget.
Source: Societe Generale Cross Asset Research
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