The Australian dollar managed to bounce back up and the euro is still looking for a direction.
The team at Credit Agricole suggests selling both currencies:
Here is their view, courtesy of eFXnews:
The AUD has been well supported, irrespective of more muted external demand expectations as related to weaker Chinese data. This is mainly due to better than expected business confidence in August, which may indicate stronger employment growth too.
Ahead of this week’s labour data release currency downside may stay limited. However, in an environment of weak global growth conditions commodity price developments should remain weak to the detriment of currencies such as the AUD.
It must be noted too that any better than expected employment report is unlikely making a case of a less dovish policy stance by the RBA. As such we remain in favour of selling AUD rallies.
The EUR has been benefitting from unstable risk sentiment and a falling probability of the Fed considering higher rates next week.
In the short-term additional upside cannot be excluded. However, we expect the currency to remain a sell on rallies, in particular against currencies such as the GBP.
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