AUD, NZD ahead of RBA & RBNZ meetings: what's next for the USD rally? (Credit Agricole)

Credit Agricole CIB Research discusses the AUD and NZD's outlook ahead of next week's RBA and RBNZ November policy meetings.

"The RBA and RBNZ will release a review of their policy rates and forecasts next week. Both are expected to remain on hold, but the market looks for the RBA to become more dovish and the RBNZ less dovish. We think the market is overestimating both shifts and we remain long on the AUD/NZD* and the AUD/JPY*", CACIB states.

On the USD front, CACIB notes that President Trump's upcoming Asia trip may further put US protectionism back on investors' radar screens and hurt the USD.

The biggest beneficiaries from any slow-down of the USD-rally could be the G10 currencies that have suffered the most so far – such as the AUD and NZD – as well as the hither to winners of the so called ‘convergence trade' – the CAD, EUR, NOK and SEK", CACIB adds.