Societe Generale Research discusses EUR/USD outlook and thinks that a test of 1.1500 looks imminent, while sees a scope for an appealing short AUD/CAD exposure.
"In Europe, nervousness surrounding the Italian Budget and comments made by some Italian lawmakers have taken the BTP/Bund spread out by another 19bp so far this morning, to 3%, and the correlation between that spread and EUR/USD suggests a major test of EUR/USD 1.15 is imminent," SocGen argues.
"But it's China that remains the biggest threat, even when the country's markets are shut for a holiday. Growth is slowing, and how policy-makers will react is less clear than is the case in the US, Europe, or Japan.
Shorts in China-sensitive currencies still seem a very good hedge against the risk of a sharper slowdown or a change in FX policy in due course. Short AUD/NOK, longs in NOK and SEK against AUD and NZD and, now USMCA is agreed, shorts in AUD/CAD all appeal. The RBA sounds as if it's on hold for the long-haul," SocGen adds.