USD is the strongest currency in longer term. Recent Core CPI and NFP readings have reaffirmed USD strength amid speculation of rate hike by September. Although we expect bullish sentiment on the dollar to remain in the near term, it is near its long-term highs against most counterparts and therefore may be susceptible to pullacks - such pullbacks will likely provide buying opportunities. This week FOMC statement will be critical for the USD.
GBP is looking at rate hike in next 12 months and it is fundamentally bullish currency in long term. GBP weakened off the lower than expected Core CPI reading but later retraced the move.
EUR is fundamentally weak because of QE and Greek debt issue, but recent inflation and unemployment numbers have signalled that recovery is on track, which gave the currency some temporary positive sentiment. There is currently a high correlation between bund yields and the euro; bunds should be monitored if trading euro. If Greece fails to make their imminent repayments, euro will be pressured.
NZD has a new official cash rate of 3.25% after the RBNZ cut rates on June 11. The Bank has left the door open for further easing and as such the Kiwi dollar is a bearish currency in the medium term.
AUD Low commodity prices and slowdown in China has put bearish pressure on AUD. Overall bias for AUD is on the bearish side of neutral, until we see more data. Language from Governor Stephens last week was dovish.
