From French investment bank BNP Paribas:
New Zealand’s July trade balance deteriorated sharply to a deficit of NZD 692 million, the first deficit in nine months. The NZD has been a clear underperformer in the G10 since the start of the week but given the extent of the correction since July (- 5.5%) and the fact that positioning has already flipped to net short we expect NZD weakness to moderate going forward. In contrast, we see the AUD as particularly vulnerable this week. Q2 private sector CAPEX data will be released on Thursday and there is risk of a third straight negative print, which would weigh on the AUD given that FX markets remain long according to BNP Paribas Positioning Analysis. We are short AUDCAD (with a target of 0.97). Our BNP Paribas Positioning Analysis this morning reports long AUD exposure at +22 and short NZD exposure at -22. Both are the largest exposures in over a year.