This hasn't changed our view that the New Zealand dollar is in a serial decline. The currency is on a depreciation cycle, regardless of whether interest rates go down or not.
The numbers are quite neutral, so they don't encourage investors to buy the Canadian dollar. The market is also looking a little bit hesitant on what the Bank of Canada governor will say later today.
The Australian dollar may struggle, simply because we perceive a further narrowing of interest-rate differentials.
The impact of day-to-day changes in the yield spread remain significant for the Australian dollar. That's clearly an issue for buyers of the currency.
Re-widening of the interest rate differential will see the Australian dollar higher. Rumors of the Medley report that the Fed will stop tightening at 4.75 percent or 5 percent is below market expectations.
Bollard is doing the right thing by saying there's a long way to go before there's a cut in rates. There will be an initial reaction in favor of the New Zealand dollar but it hasn't changed our view that the New Zealand dollar is in a serial decline.
People see fewer interest-rate increases from Canada, so there is less rationale to add to their long positions.
Major central banks in the world have talked about hiking rates, so if the Bank of Canada signals they are coming to the end of rate increases, it may push investors to sell the Canadian dollar further.
A shakeout in the commodity market in the near-term may weigh on the Australian dollar. We see further downside risk.
