Societe Generale FX Strategy Research notes that the latest positioning data suggest that the combined AUD, NZD and CAD long hasn’t been this big since AUD and CAD were worth more than a dollar each.
“Markets, as eager to jump on a new trend as teenagers, have been enthusiastic buyers of the idea that the Fed is old hat in the tightening cycle and the fun comes from BOC/RBA/RBNZ.
It’s better to be too early than too late, but the RBA this week and the RBNZ next week will both make us wait and no-one much wants a stronger currency so the longs are going to struggle for good news, other than the ongoing sogginess of US bond yields, and the revival in commodity prices.
Which is another way of saying we’ll be happy if we find AUD and CAD at these levels in a week’s time. The RBA meets tomorrow and the RBNZ meets next week. Neither will adjust rates, but maybe the RBA’s economic assessment will provide enough support to the market to prevent a correction,” SocGen argues.
Strategy-wise, SocGen likes AUD and CAD longs against JPY and USD.
Source: Societe Generale Cross Asset Research
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