AUD and NZD vulnerable to extend losses versus the USD – BNPP

In view of analysts at BNP Paribas, AUD and NZD are vulnerable to extend losses against the USD in our view. 

Key Quotes

“BNP Paribas FX Positioning Analysis signals that AUD long positioning appears extended after increasing from -25 (on a -/+50 scale) in mid-May to +18 currently; the market also remains long NZD (+10) ahead of Thursday’s RBNZ monetary policy meeting. The RBNZ may strike a dovish tone after disappointing Q2 inflation and labour market data. Weaker-than-expected consumer confidence and home loans data would likely weigh on AUD.”  

“Members of the policy committees of the RBA and the RBNZ have expressed concerns before about currency strength. Our recent analysis, suggests that the year-on-year strengthening of the NZD and AUD on a trade-weighted basis, should push down inflation by 0.34pp and 0.15pp respectively.”