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G10 Financial Scorecard: Recommends Buying USD, NZD, And AUD

ByDanske Markets
Published 10/21/2013, 07:10 AM
Updated 05/14/2017, 06:45 AM

This week the scorecard recommends buying the USD, NZD, AUD while selling the GBP, NOK, CHF

Last week's sell-off in the USD as a result of the last-minute deal on the US debt ceiling is the key driver of this week's recommendation to buy the greenback (from a fundamental point of view we would not rule out that the USD sell-off continues, though).

The scorecard also suggests being long the NZD and AUD on interest rates and technicals, respectively. Indeed, almost 75bp are now priced for the next 12M on the Reserve Bank of New Zealand (albeit we think this is a little overdone). But last week's gains in both of these commodity currencies drag in the other direction.

Technicals now increasingly suggest the GBP is overvalued, whereas it is mainly last week's NOK strengthening that has made the scorecard more reluctant to buy into this Scandi currency. While markets have become alert to a Norges Bank that has been repeatedly dovish this year, the late-September weakening of NOK should limit the prospects for this at Thursday's central-bank meeting.

Next scorecard signals will be sent out on FX Strategy - a G10 FX Financial Scorecard28 October. For a thorough introduction to the scorecard, please see FX Strategy - a G10 FX Financial Scorecard (29 September 2010).

To Read the Entire Report Please Click on the pdf File Below.

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