Scope for Cad Outperformance Versus Nzd

Scope for Cad Outperformance Versus Nzd


Quotes from RBC Capital Markets:
-Whereas comments this week suggested that the debate over exchange rate strength is heating up for the RBA and NZ government, comments from BoC Governor Carney on the subject were much more sanguine.
-Despite the fact that CAD strength has occurred against a backdrop of low levels of M&A inflow and decelerating terms of trade, Carney suggested that CAD has not yet reached the BoC's pain threshold.
-Carney's interviews this week also reinforced the notion that the next move in rates is higher-a fact with which market pricing has recently been catching up. RBC expects the next move in rates to be a 25bps hike in 2013 Q1, which is discounted with less than 50% probability by OIS markets.
-Taken together, there is scope for CAD outperformance versus NZD, and to a lesser extent AUD.


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