NZD/CHF: Most attractive candidate for a long - Westpac

Research Team at Westpac, suggests that the NZD/CHF is the most attractive candidate for a long.

Key Quotes

“NZD has benefitted from the sharp 30% rise in dairy prices during the past six weeks (the all-product index is now 75% above the Aug-15 low), which adds to the currency's already strong global appeal (thanks to its high real yield advantage). Dairy's rebound will also temper the RBNZ's enthusiasm for cutting the OCR, such that a Nov cut may well be the last in this cycle. On the cautionary side, the momentum may be with risk appetite but entry levels are far from compelling (VIX and CVIX are both at multi month lows).

Our global data surprise index is rolling over, not the most auspicious backdrop for risk appetite and both the ECB and BoJ might underwhelm at their respective upcoming September meetings. In any case our scoring system favours buying NZD/CHF on pullbacks rather than at market. We buy NZD/CHF at 0.7050, stop 0.6975.”