Credit Suisse Trade of the Week: Long GBP/NZD

Rationale: The FED meeting introduces a lot of binary risk into the market this week. We believe GBP longs could be a bit more resilient to the different scenarios. If the FED hikes/signals convincingly near term hike, we would expect GBP to gain too on increased speculation of a BoE hike. If the FED disappoints with a more worried statement on global developments, GBP could suffer less than the USD in this case. Meanwhile, we remain bearish NZD and for this week we see risks to the downside for the GDP release, given the sharp weakening of domestic activity indicators in the past months. Also, RBNZ has taken a cautious approach to dairy price recovery at Fonterra auctions, focusing instead on the challenging medium term outlook for the sector. We think this would limit the extent NZD can benefit from a further near term auctions price recovery. 

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