Sell GBP/USD and USD/CAD Strength, Buy NZD/USD on Dips – Westpac
Sell GBP/USD and USD/CAD Strength, Buy NZD/USD on Dips – Westpac
Research Team at Westpac, suggests that the GBP/USD remains high on their sell list.
Key Quotes
“We
sell GBP/USD at 1.4450, stop 1.4610. Even if the polls break toward
more clearly toward "Bremain" ahead of the 23 June referendum it’s hard
to see GBP forcefully unwinding its Brexit premium until the certainty
of the vote is out of the way. A vicious squeeze higher likely to be
seen if the EU referendum polls and vote pan out in similar fashion to
the Scottish independence vote and the last UK general election (i.e.
strong gains for the status quo), but that is a trade for another day.
Our
USD/CAD stance has shifted 180 degrees. What had been a buy on dips
stance in USD/CAD shifted. Our model remains upbeat but our macro and
technical views are much more negative. USD/CAD momentum remains
decisively lower, the break of 1.2850 a critical technical threshold
that should unlock further losses. Upgraded BoC growth projections this
week thanks to the Trudeau fiscal stimulus and a strong Jan GDP (+0.6%)
should add yet more impetus to USD/CAD weakness. The BoC should still
deliver a neutral signal on policy but growth could be upgraded from
1.4% for 2016 to around 1.8% while the 2.4% forecast for 2007 could
easily be lifted to 2.8%. We look to sell USD/CAD at 1.2925, stop
1.3055.
Our process guides us into a fresh NZD long on dips.
NZD/USD has again broken above a six-month old contracting range (the
previous break on 30 March was unsustained), and as long as it remains
above 0.6875 we will adopt a bullish week-ahead bias. There's no NZ data
of note until the Q1 CPI release on 18 April, leaving NZD/USD at the
mercy of firming risk appetite and a challenging USD outlook. Above
0.6965 then targets 0.7175. We look to buy NZD at 0.6850, stop 0.6750.”
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