Focus of the day:
"USD: Bullish. As the Fed continues to taper, we expect many EM currencies to gradually come under pressure, as excesses of the unprecedented period of record low US interest rates begin to reveal themselves.
EUR: Moderately bearish. We believe EURUSD prospects will be determined by the evolution of short-term real interest rate differentials and flow-based factors, where we see scope for the euro support to diminish a little. foreign currency units per euro.
AUD: Long-term bearish. The RBA seems likely to turn more dovish after the Q2 inflation print, with declining yield spreads and falling commodity prices pulling AUD down further out.
NZD: Near-term bearish. The slower buildup in inflation pressures and, importantly, sharp fall in dairy prices led us to expect the RBNZ to pause after the July hike. The rate market is still pricing for a small chance of an RBNZ hike in September and October and could be vulnerable for a correction. We remain bullish NZD fundamentally and look for monetary and economic divergence between Australia and New Zealand to continue to drive AUDNZD lower into 2015."
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