USDCAD and AUDUSD, Dovish BoC vs supportive RBA


The housing dynamic for CAD: Canada hasn’t gone as far as negative rates but is, like most other commodity exporters, dealing with a housing market boom. Yesterday Canada’s finance minister announced further rules to limit foreign investment into the housing markets. In particular it is closing a current loophole that allows foreign investors to claim a taxexemption when selling a property if they say it is a primary residence. This and a range of other rules could reduce foreign inflows into CAD. Also, if the housing market appears to be cooling down then this could allow the BoC to cut rates further without being worried about fueling a housing bubble. We stay short CAD vs. RUB and NOK as we expect relatively weaker data to make the BoC more dovish


RBA supports beinglong AUD: Australia is still dealing with low inflation but the relatively high interest rates,as supported by the RBA staying on hold, should keep the carry-related currency inflows coming. There were only slight tweaks to the RBA’s statement,notably thathousehold consumption appears to have slowed a little recently, which is why we need to pay attention to retail sales overnight. Comments on AUD remain similar to before. In New Zealand business confidence improved in 3Q from 19 to 26, with most support coming from dairy regions. AUDNZD is currently sitting at its 100DMA, so we need to watch for any break away from this region.