TD Research discusses its tactical views on USD/JPY and NZD/CAD. TD prefers to sell USD/JPY on rallies, while maintains a long NZD/CAD* as its trade of this week targeting a move towards 0.8950.
"The escalation of trade wars beyond China and lack of US fiscal support this year suggests that US exceptionalism could be at risk. Though we think recent warning shot towards Mexico could be resolved, the road ahead on the global trade front is likely to remain challenged until the G20 later this month," TD notes.
"This backdrop leaves us taking on a sell-on-rally posture with USDJPY. We note here that our FV estimate suggests that the pair should be trading just below 107. Meanwhile, we share the universal expectation of an RBA cut tonight, in what could lend modest - albeit brief - relief to AUD. We think this could spillover to a very oversold NZD. This has eyeing a NZDCAD topside move towards 0.8950 in our trade of the week (TOTW)," TD adds.
*Recorded in eFXplus Orders