Credit Agricole CIB Research discusses AUD and NZD outlook ahead of next week'sNovember policy meetings.
"The RBA and RBNZ will release a review of their policy rates and forecasts next week. Both are expected to remain on hold, but the market looks for the RBA to become more dovish and the RBNZ less dovish. We think the market is overestimating both shifts and we remain long AUD/NZD* and AUD/JPY*," CACIB argues.
On the USD front, CACIB notes that President Trump's upcoming Asia trip may further put US protectionism back on investors' radar screens and hurt USD.
The biggest beneficiaries from any slow-down of the USD-rally could be the G10 currencies that have suffered the most so far – AUD and NZD – as well as the hitherto winners of the so-called ‘convergence trade' – CAD, EUR, NOK, and SEK," CACIB adds.