Danske Research discusses AUD, NZD, and CAD outlook, and maintains a modestly positive bias in the near-term.
"The three commodity currencies have traded fairly in tandem over the past month..Going forward, developments in China including an eventual trade deal with the US will be key for both risk appetite and commodities.
In light of our constructive view, we remain modestly positive on all three. We stick to our view of two hikes in Canada and unchanged policy rates in New Zealand and Australia over the next 12M. According to our PPP model, CAD is undervalued whereas AUD and NZD are trading close to fair value (versus USD).
Danske targets AUD/USD, NZD/USD, and USD/CAD at 0.72, 0.68 , and 1.30 in 1-3-months.