AUD/NZD has some room to slide before a rally into year end

An item from TD on the Australian and New Zealand dollars

• Easier RBA and RBNZ have meant AUD and NZD have succumbed "to the USD carry king."
• While there is room for fiscal manoeuvring, hedging costs and loss of yield advantage to the USD will likely continue to starve these currencies - NZD especially - of foreign capital flows.

TD expect AUD and NZD to continue to trade heavily "Absent an appreciable and sustained positive global macro impulse"

• see clear risks that they continue to grind towards new cycle lows

On the cross:

• we see room for AUDNZD to temporarily dip before returning towards 1.10 by year-end

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