Daily thread to exchange ideas and to share your thoughts

The kiwi is the lead gainer today as RBNZ rate hike expectations continue to gather pace, with AUD/NZD extending to the downside to its lowest levels since February.

I would expect the low at the time @ 1.0540 to be tested with further downside potential to follow on a break, targeting the December lows @ 1.0418-23. The monetary policy and economic divergences are still a key driver backing that conviction.

Risk sentiment continues to look more weary and cautious, which could lead to some additional retracement after having flirted with fresh all-time highs in US stocks earlier this week. As such, commodity currencies could have the propensity to underperform against the dollar - particularly USD/CAD, as it approaches its 200-day moving average.

The bond market is also still one to watch as Treasury yields hold a minor bounce off 1.30% for now but could be pressured lower once again as the bid in bonds has been something persistent despite a slew of more positive US data points.

I reckon we might get more of the same from the retail sales report later and if that disappoints, yields may slide and that could cause some degree of risk aversion.

What are your views on the market right now? Share your thoughts/ideas with the ForexLive community here.