Muted Response Likely to Wednesday’s Dollar Bloc Events

The main events this week in the peripheral dollar bloc both happen on Wednesday. First is the Australian Q3 CPI data. That the RBA sees no need currently to signal a further move in the cash rate is “imminent” points to a more muted reaction to this report than has been seen following many prior reports. This is followed by the Bank of Canada announcement, but with no change in BoC policy likely anytime soon US factors will likely remain the main driver of CAD in coming weeks. Indeed we see these US factors as indicating further near-term gains in AUD, CAD, and NZD against a broad range of currencies are likely. We see particular upside in AUD, and retain our bullish view on AUD/NZD.