Friday, November 6, 2015

Long AUD/NZD, Long GBP via basket - Nomura

FXStreet (Delhi) – Research Team at Nomura, recommends entering a long position in AUD/NZD and also reiterating their conviction in GBP outperformance against the European G10 in 2015.

Key Quotes

“We expect the RBNZ to cut interest rates at its December meeting, amid concerns over the impact of the NZD’s recent appreciation on tradables sector activity and medium-term inflation. On the AUD side, we do not expect the RBA to cut rates until February, so we entered long positions going into the 3 November meeting (where rates were kept on hold). We hope to take advantage of the divergence between the rate differential and AUD/NZD.”

“We also entered GBP long positions before the BoE QIR, in an equally weighted basket against EUR, USD and NZD. GBP has restarted its outperformance recently, with chances of near-term ECB easing having increased. We also believe that the current market pricing for the spread between the Fed and BoE rate hike timing is still too wide.”

“We have been mostly trading GBP long against low-yielding European G10 currencies (EUR, SEK, and CHF), and in the medium term, we still prefer GBP long positions against these currencies. However, in the near term, we want to be more neutral from risk sentiment and EUR/USD movements ahead of key US data and scheduled speeches from the Fed and ECB. Thus, we recommend having a GBP long basket against USD, EUR, and NZD (equally weighted).”
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