As the market in general remains frustrated with the lack of a clear trend in G3 currencies, we highlight significant opportunities outside of these currencies. These include long NOKSEK and AUDNZD and short EURCAD. NOKSEK has now traded to new highs for the year and relative yields signal considerable upside from current levels.
Long AUDNZD has been one of our top FX trade ideas for 2014. This pair has bounced from 30-year lows and should continue to move up. Over the coming week the market will concentrate on the April NAB business confidence survey (Monday), May consumer inflation expectations in Australia (Thursday) and New Zealand Q1 retail sales (Tuesday). We highlight the prospect of greater tightening in Australia and less in New Zealand being priced into the markets.
We also believe that the long period of CAD weakness may be ending especially as rising inflation data may lead markets to bring forward expectations for the Bank of Canada’s tightening cycle.
BNP Paribas