FXstreet.com (Barcelona) - Nomura has closed a sizeable short position in AUD/NZD, held since late July, arguing that out of the three key drivers for the trade, which include "1. AUD government bonds are running out, while inflows into NZD government bonds and for reinsurance purposes remain strong. 2. A large divergence between where rates spreads say AUD/NZD should be and spot FX. 3. A turn in relative commodity prices," the third may have run its course in the near term.

Nomura FX Strategist Geoffrey Kendrick notes: "Chinese data look to be improving and have started to assist iron ore prices. And on the NZD side, we see risks to Tuesday's Fonterra milk auction due to the large size of this auction (Fonterra forecast 40,000MT of whole milk powder will be sold making it the largest ever auction). In previous research into Fonterra milk auctions we highlighted the link between achieved prices and auction volumes."