Commodity currencies could follow USD lower – BNPP

By FXStreet Research Team at BNP Paribas, suggests that the CAD and AUD have held up better than might be expected this week, holding stable against a broadly weaker USD despite continued weakness in crude prices.

Key Quotes

“We see scope for these currencies to depreciate in the weeks ahead, even vs. the USD. Both are current account deficit economies reliant on financial inflows and both are exposed to continued weakness in commodity prices.

While the broad USD retreat may have reduced the risks of further CNY devaluation for now, the AUD remains exposed to negative news from China and further pressure on industrial metals prices.

There is also scope for markets to increase pricing for RBA and BoC easing. RBA Governor Stevens’ testimony to parliament yielded few surprises, where he maintained an easing bias but also continued to sound relatively optimistic about the domestic outlook.”
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Source:: FX Street