Swiss Bank UBS has suggested to clients to go short NZD. They report “NZD/USD should head lower. Sell rallies to 0.7600 with stops above 0.7720, targeting an eventual retest of 0.7300/0.7175″. Selling NZD against the USD is popular among brokers at the moment with BNZ also suggesting a short trade on NZD/USD.
Sell on limit at 0.7600, stop above 0.7720 with a limit at 0.7300 or lower.
JP Morgan suggest to clients to get short AUDJPY. They report “many factors make AUD vulnerable to additional
declines: rich valuations, sensitivity to global growth concerns through lower commodity prices as well higher
volatility, and finally the upcoming CPI report. The market has already taken down its expectations for inflation and is looking for a benign outcome for 3Q given the repeal of the carbon tax but J.P. Morgan forecasts (0.3%q/q for headline, 0.4% for the core) are still below that of the market (0.4% for the headline and 0.55% for the core). If our forecast is realized, it would leave 6M annualized rates of headline and core inflation around the bottom of the RBA’s target band and would reinforce the idea that risks are biased towards more disinflation in Australia than currently forecast by the RBA. Finally, RBA minutes to be released next week should also be interesting as they will focus on RBA’s shifting narrative on China. By contrast, JPY will be the only currency that is insulated against a further decline in oil prices and will benefit if vol increases further.
Sell AUD/JPY in cash at 93.50. Stop at 95.25“.
(Source: JP Morgan)