Credit Agricole on USD, EUR and NZD
When it comes to the Fed we see little scope of further falling rate expectations from the current levels. It may be true that growth expectations fell on the back of the most recent weaker than expected labour and retail sales data releases. However, the Fed is likely to regard such weakness as temporary rather than a change in trend. This is especially true as overall growth conditions remain favourable and as several Fed members reiterated recently, that interest rates should rise soon.
As a result to the above outlined conditions, we expect the greenback to prove a buy against the EUR too as a rising probability of the ECB cutting the deposit rate a new later this year should keep demand for the single currency muted.
In New Zealand a larger than expected September trade deficit was released. However, this was largely due to stronger import growth what should be taken as a positive indication of the domestic economy.
Nevertheless, given the risk of the RBNZ easing monetary policy further tomorrow the NZD is likely to stay a sell on rallies for the time being.
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