Report5 January 2018Updated one year ago

Dollar bloc: Carry on, carry off

While US-centric geopolitical concerns marred 2017, each of the dollar bloc currencies has had their own idiosyncratic political uncertainties to contend with. Here, we take a look at three common themes running through the AUD, NZD, and CAD

Executive summary
  • The combination of political risks and financial stability concerns have reduced the speculative carry attractiveness of AUD and NZD.
  • The yield advantage these currencies have typically commanded is set to deplete further in 1H18 with the RBA and RBNZ happy to sit tight on policy.
  • We see CAD as the 'darling of the dollar bloc' amid ongoing economic outperformance, policy divergence and reduced sensitivity to oil prices.


This report is part of our 2018 FX outlook published December 2017

Three themes for the dollar bloc in 2018