$-bloc: Growing divergence

G10 commodity currencies are showing some diverging dynamics on the back of domestic factors. The New Zealand dollarcontinues tolagits peers, the Australian and Canadian dollars, as investors appear to be gradually pricing in a move by the Reserve Bank of New Zealandinto negative rates, and a fresh lockdown in Auckland is also weighing on the currency. Still, we expect NZD to find a floor soon as some investors may doubt thatthe RBNZ will effectively cut again. AUD, instead, is benefiting from some fresh hopes of re-opening in Victoria, while the Reserve Bank of Australia'sdownbeat tone on the economic recovery shown in the minutes overnight had already been priced in after Governor Philip Lowes speech last week, and left little markon AUD. CAD is retaining good momentum largely thanks to lingering good resilience in oil prices despite the resignationof Canadian Finance Minister Bill Morneau yesterday.

View post:

FX Daily: Over-complacent GBP at risk as Brexit talks resume - ING Think