Societe Generale Research discusses some of its key trading strategies in G10 and still holds the view of attractive exposure in short AUD/CAD.
"The Fed is following the data and a re-steepening of the yield curve suggests that some think they are getting left behind a bit. All of which is good for the dollar and bad for any currency sensitive to global monetary policy.
Asian currencies will remain vulnerable, though they are helped a bit this week by the Chinese holiday. USD/JPY has pushed higher this week (this morning notwithstanding) re-coupling with US yields, but a soggy CNY plays a big part in that, too. When USD/CVNY was falling earlier this year, USD/JPY fell despite rising US yields," SocGen notes.
"Now, the biggest question in FX may be how the yuan trades when China returns from this week's holiday. Shorts in AUD against CAD or NOK seem a sensible precaution against a break higher in USD/CNY," SocGen adds.